The Rebirth of the Financial Hegemon

Dry!

That's what Soros finally came to after his meeting with Stanley Druckenmiller the next day.

There are three reasons.

First, the hegemony of the US dollar, which is the world's reserve currency.

Ninety percent of the world's international trade is settled in US dollars.

Since the beginning of the year, the dollar exchange rate in the international market has continued to strengthen, and the implementation of the fixed exchange rate of the Thai baht means that it continues to appreciate passively.

This is very bad for Thailand's economy.

In the Asian market, Japan is the main competitor in Southeast Asia due to its highly developed country.

Whether in agriculture or industry, Japan has extraordinary competitiveness in Asia and the world.

But while the dollar strengthened, the yen fell.

The currency parity of Asian countries against the yen was originally too high, and now the dollar is strong and the yen is falling, which has led to a decline in the exports of countries pegged to the dollar and exacerbated the current account deficit.

Statistics collected by the Quantum Fund team show that.

From 1995 to 1996.

The overall export growth rate of Thailand, Malaysia, Indonesia, the Philippines and other countries fell from 22.8% to 5.6%, a decline of nearly 70%.

Gross domestic product growth in East and South-East Asia fell by nearly a percentage point due to a major export slump.

Second point

The exchange rate of Southeast Asian countries is mainly determined by the US dollar as the dominant currency.

However, its monetary system pegged to the US dollar leads to a small range of free fluctuations and an inflexible exchange rate system.

This is especially the case in Thailand.

Judging from the actual fluctuation of the Thai baht exchange rate in 1993 and 1994, the monthly rate of change was only 0.15% to 0.16%.

Although this inelastic peg can encourage direct investment to a certain extent, it severely limits the operational space of the Bank of Thailand to adjust the economy with monetary policy.

Since 1988, a large amount of capital has flowed into Thailand, putting the baht under greater pressure on appreciation.

The Bank of Thailand had to limit the baht's appreciation and intervene by neutralizing it by the end of 1993.

As a result of the intervention, the gap between domestic interest rates and international interest rates has continued to widen, further attracting capital inflows.

After the Bank of Thailand abandoned neutralization intervention, the massive inflow of capital contributed to the expansion of the domestic money supply.

This has further stimulated domestic demand in Thailand and increased investment in non-important sectors, making it difficult for the Bank of Thailand to implement an effective monetary policy.

Although the currencies of other Southeast Asian countries are allowed to fluctuate significantly, due to the government's strong intervention in the foreign exchange market and exchange rate.

In an attempt to maintain a certain level of psychological price for a long time, its exchange rate policy is also inflexible.

This mentality is somewhat similar to the mentality of living in a small family.

Just like a farmer, raising a pig.

The price of pigs was five yuan a pound in the previous year, and the next year would have to sell for at least five yuan a pound anyway.

If the price of pigs falls, there will be no way to overcome the psychological hurdle.

Simply put, it is wishful thinking that regardless of the changes in the market, the domestic currency will remain at the price that you want.

third point

When Southeast Asian countries relaxed capital account controls, they did not carry out corresponding reforms to their exchange rate regimes.

Economically, free capital transactions cannot coexist with artificially fixed exchange rates for a long time.

This rule is unbreakable.

Because exchange control is implemented to maintain the exchange rate that appears to be overvalued in the market.

Southeast Asian countries have implemented capital liberalization without a strong balance of payments and a flexible and effective exchange rate system, so that the exchange rate cannot be adjusted automatically.

With capital being allowed in and out freely, the Quantum Fund's intelligence agency believes that speculators can speculate in the market with less risk.

The Quantum Fund’s intelligence system also found that Southeast Asian countries, especially Thailand, lacked effective regulation of the financial sector.

Thailand opened its capital account prematurely, while the central bank failed to supervise foreign banks' offshore business and financial transactions.

Due to the high degree of openness of the capital account in Thailand, non-residents can more freely participate in trading activities in the local market, while the supervision of the central bank is not timely.

On the unchangeable basis of these three points, the collapse of the Southeast Asian economic system is a foregone conclusion.

Unchangeable fortunes.

Like a building with a hollowed-out foundation, it is only a matter of time before it collapses.

No one can change the fortunes of these emerging market countries.

If it collapses early, it may end early. The longer it drags on, the heavier the disaster will be.

After confirming this result, Soros muttered to himself.

"What we're doing isn't wrong, exactly, it's not exacerbating the gap between rich and poor in this country.

On the contrary, we are helping this country on the right path, not going further and further down the wrong path..."

A week passed in a flash.

This week, Stanley Druckenmiller has focused entirely on Southeast Asia.

And Soros has been waiting quietly, waiting for the opportunity to appear.

This opportunity is the ASEAN political landscape.

For this question, Soros has considered many options nearly a month ago.

Now Soros has drawn up an action plan, basically the same as the last sterling incident~www.readwn.com~ that is to use political factors to attack!

After studying with Stanley Druckenmiller, Soros sat sullenly in the sofa chair, and stretched his back.

He shouted at Druckenmiller: "Let the world turn to Southeast Asia!"

A silent battle has begun, and the specter that roams the world hangs over the nations of Southeast Asia.

….

In North America in November, it snowed heavily.

The entire city of Manhattan is often covered in white.

The snowflakes that reflected the crystal light made Zhao Jiangchuan feel lost.

The arrival of winter means that the year is coming to an end.

In a few months, it will be the annual Spring Festival in China.

Set off firecrackers, eat dumplings, string relatives.

You can also get lucky money.

the most important is.

There, there were parents who gave birth to him and raised him.

There, no matter how tired you are, there will be a safe haven.

Zhao Jiangchuan felt homesick.

"We currently hold 180 billion baht assets in the Thai market. From a risk point of view, I think we should establish a certain position size in the interest rate market to deal with the risk that the baht may depreciate..."

"At present, the voices for the devaluation of the Thai baht are getting louder and louder. From the analysis of the current situation in Thailand, the devaluation of the Thai baht is already a matter of time, so I also agree to establish a short position on the Thai baht..."

"Last month, international capital made several tentative attacks on the Thai baht. Judging from the Bank of Thailand's response, the Bank of Thailand's psychological price for the Thai baht is between 24 and 25..."

"From the data we have collected, BOT is the only buyer of the baht in the international capital's test of the baht..."

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