d with such commercial transactions. Such an operation sounds relatively simple, and, in theory, the operation is relatively simple. In actual practice, however, such an operation is highly complicated, and requires a highly trained, highly competent, and diligent individual, if risk is to be minimized and if losses are to be eliminated from the arbitrage operations.
Translation losses can occur when a multinational business organization either holds large volumes of foreign currencies or when transfers of foreign currencies must be made between subsidiaries and parent. Such situations arise when subsidiaries or parent firms hold balances in foreign banks balances denominated in a currency other than the currency of the home country of the company, or when it is desired to remit profits from a foreign subsidiary to the parent company.
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