The Son of Finance of the Great Age

  Chapter 224 Bangkok Clouds (2)

   "Then what do we need to do?" Liao Xiaohua asked cautiously. Regarding the allies mentioned by Zhong Shi just now, he did not continue to ask, because he knew that any country has one or two friends, and even a country like North Korea has a certain big country behind it, let alone a country like Thailand. A relatively mild country.

  The reason why he asked cautiously was because he was afraid that Zhong Shi would misunderstand him. You must know that the flagship fund of Tianyu Fund has always been controlled by Zhong Shi himself, and even Andrew can't get in. That's why he asked such a general question.

"Don't worry, I've already made arrangements!" How could Zhong Shi miss such a financial turmoil sweeping across the entire Southeast Asia region? At that moment, or waiting for him to detonate it himself.

Take Thailand as an example. Before Thailand raised interest rates in early January, Zhongshi borrowed a total of 5 billion U.S. dollars in one-year Thai baht, and locked the interest rate at an annualized level of 8%. Shorted approximately US$1 billion in Thai Baht in the forward market.

  The reason why he didn't borrow more is because his funds were all invested in the Russian government bond market, and he couldn't get away for a while. This amount is already large enough. You must know that even the ever-expanding Quantum Fund, because Druckenmiller and Soros reached an agreement not to expand the capital scale of the main fund, their flagship fund is now maintained at about 15 billion US dollars . Excess funds were invested in Emerging Growth, Quasar and Quota funds.

At this time, the U.S. dollar interest rate remained at an annualized level of 5.25% for the entire year of 1996, but in Thailand, due to the threat of inflation brought about by economic overheating, the one-year interest rate was usually maintained at 8% to 10%. More than 10%, and more interestingly, the interest rate of each bank is different, but it is generally above 10%.

The direct consequence of this situation is that there is a lot of hot money for arbitrage. Even the local banking industry in Thailand is very happy to borrow from overseas with an interest rate that is at least 3 to 5 percentage points lower than that of the Thai baht. Sell ​​it and turn it into baht for lending. The total amount of such overseas borrowings exceeds US$1 trillion, and more than 90% of them are short-term loans with a maturity of less than one year, which means that when the value of the Thai baht becomes unstable, these hot money will flee Thailand immediately. By then the whole of Thailand will be in ruins.

   Seeing that Zhong Shi had already made the deployment, Liao Xiaohua stopped asking, and instead chatted with Zhong Shi about the current situation. It didn't take long for him and Andrew to leave. Now that Zhong Shi already has an understanding of the situation in Southeast Asia, there is no need for them to stay any longer.

  …

  Bangkok, Bank of Thailand.

  Governor Luncha Malaga is having a conference call with his allies to discuss how to jointly face the impact of international financial institutions on the Thai baht.

   "How is the situation in the banking system?" Gao Shengming, chairman of the Monetary Regulatory Authority of Singapore, asked the question. He was more concerned about the credit status of the Thai banking system than the current short-selling of the Thai baht.

  Different from the central banks of most countries in the world, the Monetary Authority of Singapore does not rely on the rise and fall of interest rates to affect finance, but uses several foreign currency exchanges to regulate the Singapore dollar market.

The reason is that at this time, the Monetary Authority of Singapore does not have the authority and responsibility to issue currency, and naturally it cannot change the increase in market liquidity, so it can only change the entire social liquidity by changing the form of stock, and then affect the entire financial market , so the Monetary Authority of Singapore has more control over the foreign exchange market than the central banks of other countries to a certain extent.

  At this time, Gao Shengming is not worried about the sell-off in the foreign exchange market, because the combined funds of the Monetary Authority of Singapore and the Bank of Thailand are sufficient to cope with the current situation. However, Gao Shengming still understands why the castle is the easiest to break from the inside, because the current economic situation in Thailand is not very good. It is rumored that the operating conditions of its banking system and financial companies are extremely bad, and there are even rumors that some large banks in Thailand already on the verge of bankruptcy.

   Just last month, Moody's lowered the credit ratings of three major banks in Thailand, Ayutthaya, Kyoto and Thai Military, from A2 to A3. Moody's report said that if the Bank of Thailand does not impose stricter regulations on these banks to control, then the quality of these banks' assets will decline rapidly.

  If the problem of the banking system cannot be solved, even if the Thai government resists the blow in the foreign exchange market, the collapse of the banking system will still lead to a frantic flight of funds, and then another round of blows.

   "I have already discussed this issue with the Prime Minister and the Minister of Finance, and a new policy will be introduced in the near future to further increase the bank's bad debt margin!" Malaga said confidently.

  In fact, apart from Singapore, central banks in Southeast Asia are all focused on the baht. They are well aware that if the baht fails, one or all of them will be next.

  These central bank officials are well aware of the huge harm brought about by international hot money, especially hot money led by hedge funds. As far as the whole of Europe, and South America nearly two years ago, these tragic scenes are still vivid in their minds, but they did not expect that these scenes would come to Southeast Asia so soon.

   "Can you disclose the position of BOT (Bank of Thailand) in forward foreign exchange contracts?" Shen Liantao, vice president of the Hong Kong Monetary Authority, participated in the conference call on behalf of the Hong Kong Monetary Authority.

"Ahem..." Even though he was mentally prepared, Malaga was still embarrassed when asked this question. Fortunately, none of the people involved in the meeting could see his expression. Said: "This position is basically the same as the US dollars we sold, and the amount is about 5 billion US dollars."

In order to cope with the selling in the spot exchange market, the Bank of Thailand must buy Thai baht in US dollars in the spot exchange market, and for the sake of value preservation, they have to buy US dollar contracts in the forward market, which forms a rivalry with international speculators . The party shorting the Thai baht is selling the Thai baht in the spot foreign exchange market and shorting the Thai baht contract on the forward contract, exerting double pressure on the Thai side.

  The location of this forward contract transaction is not fixed, some are in London, some are in New York, and some are in Singapore. According to the news from the Singapore Exchange, during this period of time, in the forward foreign exchange market of Asian currencies, the total daily transaction value was as high as 6 billion US dollars, and the transaction volume of the Thai baht grew the fastest, which means that the current international hot money The main force of the attack is in Thailand.

"The most important thing at the moment is to closely monitor market trends. Especially in the forward foreign exchange market, once there is a huge sell-off, we must pay attention to the spot foreign exchange market as soon as possible, and hope that everyone can help." This time Without waiting for others to ask questions, Malaga spoke first.

  Although this kind of dialogue is very passive, but after all, he is asking for others, so he has to be humble. Although aggrieved, Malaga still had to lower his posture and beg humbly.

  There was a low murmur on the phone, and Gao Shengming was the first to speak after half a day: "Don't worry, Singapore will definitely support the Thai baht. We have prepared 10 billion US dollars and are ready to enter the market at any time."

  The reason why Singapore supports Thailand so much is because the Thai economy is inseparable from them, and secondly, most short-selling contracts of the Thai baht are carried out in the Singapore futures market. Singapore is also more active in terms of morality.

  Naturally, Singapore also has its own considerations. Although Thailand has been actively building a regional financial center in the past few years, it still cannot compare with old financial centers such as Singapore and Hong Kong. Singapore wants to actively intervene in the market this time to let the world understand that Singapore is not just a small place, nor will it be manipulated by others.

Hearing the promise from Singapore, Malaga breathed a sigh of relief. Although he knew that Singapore would give them all the help, he only hung one in his throat when he heard Gao Shengming, who represented the government, say it. Chu's heart was relieved.

"We also need to pay attention to the dynamics of the forward market. I'm afraid we can't give you too much support. It is estimated that there is only a limit of 1 billion U.S. dollars." After the first statement, others also expressed their opinions. The person is Gabi Sinson, governor of the Central Bank of the Philippines. Like Thailand, the Philippines has also been severely attacked by international hot money in the forward market. Although the situation is not as serious as Thailand, it has reached the point of urgency.

   "I still need to discuss with Mr. President, but we will enter the market to buy Thai baht when needed." Shen Liantao said after expressing his views in the Philippines, Malaysia and other regions.

  Although Malaka is not very satisfied with Hong Kong’s statement, he also knows that Hong Kong is at a juncture of historical change. Under such circumstances, it is difficult for Hong Kong to give too much support.

   "In addition to our support, the Thai government should also do something to limit the liquidity of investment funds so that they cannot succeed." At the end of the call, Gao Shengming suggested.

"Yes! We will soon introduce regulations to restrict local banks from borrowing funds from foreign investors, and at the same time greatly increase the level of offshore lending rates, which will greatly increase their borrowing costs." Although there is no promise from Hong Kong, but Malaga knows that now is the best result. In a good mood, he disregarded the confidentiality regulations, and revealed all their internal conspiracy plans in one breath.

  Seeing that Thailand has also made full preparations, several influential figures in Southeast Asian financial circles breathed a sigh of relief. They believe that with the strength of their whole country, they will definitely be able to cope with this currency crisis.

Only Shen Liantao, who hung up the phone, was unhappy. He repeatedly chewed on the phrase "restrict local banks from lending funds to foreign investors" in Malaga. As long as Thailand has an administrative order, all local banks in Thailand must follow it, but Hong Kong, In this place known as a free port, it is impossible for the Monetary Authority to issue such an order.

  If international hedge funds attack the Hong Kong dollar, what else can Hong Kong do besides raising the lending rate? Shen Liantao fell into deep thought.

   Thanks to book friends Feng 33 Mo, rexjue, and Zizhu Luoye for their monthly votes! thanks for your support!

  (end of this chapter)