The Son of Finance of the Great Age

  Chapter 257 The Thai Baht Crash (2)

   Entering the middle of the night, the spot exchange market and the futures exchange market take over the Asian time at the same time, and the transaction on the Thai baht has once again become the focus of the market.

At this time, the news about another large-scale attack on the Thai baht has spread throughout the market. There are several versions of rumors, the most reliable of which is that Quantum Fund and Tiger Fund once again led the international hot money to launch an attack. The market generally believes that this The news is the most accurate.

  But soon, through the analysis of the disk and the integration of the news, the careful organization found that this is not the case, or that some of the facts are in line with the rumors, but there are still rumors.

First of all, the intensity of the attack was not too great. The daily transaction volume was only four or five billion U.S. dollars. Compared with the scale of the attack in May, the difference was really too large; There will always be rumors of one kind or another, but the news on this day is basically calm, and there are no news events that need special attention, which is not in line with the usual style of shock funds.

As a result, some people in the market are ready to start looking for short-term arbitrage opportunities, risking their lives to enter the market for transactions, because no one believes that just relying on the scale of attacks of billions of dollars in a single day, they want the Thai government to give up A fixed exchange rate system is obviously unlikely.

   Although the trend is down, there is still a chance for a rebound.

  At this time of trading in Asia, the exchange rate of Thai baht to US dollar stays at 25.97, and the futures price is 26.12. At least the price in the spot foreign exchange market has not reached the lower limit stipulated by the BOT, which means that the BOT still has the ability to resist.

The European and American markets opened one after another. After the initial testing of the Thai baht, the transaction volume began to increase gradually. The price of the Thai baht fluctuated between 25.97 and 25.99, and occasionally fell to 26, but was quickly replaced. Pull it up, obviously the BOT is supporting it inside.

   In terms of futures exchange, arbitrage funds have begun to appear again. Some of their strategies are to lock in profits through exchange rate differences in different markets, and some are betting on BOT's protection of the market during the Asian session to make profits by building a bottom in the European and American markets. These funds, together with BOT's own funds, guard the price of the Thai baht futures contract.

  …

  In Thailand, an emergency telephone conference that gathered many high-level people such as the central bank, the Ministry of Finance, and government economic staff is going on intensely.

"In the last three trading days, there has been a wave of selling the Thai baht to varying degrees in the European and American markets. I believe that today's attack during the day is a long-planned one. They have launched a general attack today by gradually eroding our foreign exchange reserves. Break down the exchange rate system." Malaga first introduced the situation that happened in the past few days, and then recounted the events of the day, so that everyone who participated in the meeting had a clearer understanding.

   "So, how much foreign exchange reserves do we have now?" A voice roughly interrupted his narration and asked the core question directly.

  The speaker is Hawa Chachai, one of the prime minister's economic staff. He is a professor of economics at Bangkok University. He has a doctorate from the University of Pennsylvania. He is a scholar whose position tends to be free market economy.

  When the Thai baht was attacked for the first time, the professor advocated the liberalization of the exchange rate system, which once angered Chavalit. But with the development of the situation, the professor's position in the entire prime minister's economic staff has become more and more important.

   Now it seems that many things are developing as he expected before. But even if he had the foresight, it was impossible for Chavalit to announce the abolition of the fixed exchange rate system in January 1997, which was determined by Thailand's economic policies in recent years.

  In the final analysis, the Thailand model captures the needs of other developed regions to transfer capital, open up new markets and reduce labor costs, which is similar to the development model of countries in other parts of Southeast Asia. In this general environment, the fixed exchange rate system has become the only choice for attracting foreign capital and relying on exports to drive economic growth.

   But now, this pattern has come to an end.

  Compared with mainland China, which provides a better investment environment and a nearly endless market, Southeast Asia has no advantage at all, and the decline in economic growth in recent years is obvious. When the profit rate of capital drops, they will take the initiative to transfer to other industries. Industries with short turnover cycles and high returns such as real estate and the stock market have become their new favorites.

  The bubble is thus produced.

   What happens next is a natural thing. The bubble will burst when it reaches a certain level. It is very simple to pierce the bubble, that is, to destroy the exchange rate system.

  Malarga thought so in his heart, without pausing, he quickly replied: "This number...doesn't need to be kept secret now. According to the current consumption rate, I'm afraid it won't last until tomorrow's trading time."

  Hearing this answer, there was a sound of gasping for air on the other side of the phone. Obviously, none of the participants thought that the situation would be so bad that they couldn't even last a day.

  After the amazement, there was a deathly silence. After a long time, Malaga heard Hawa Chachai continue to ask: "How many positions are still in the foreign exchange market that have not been liquidated?"

Selling U.S. dollars in the spot exchange market and buying U.S. dollar-Thai baht contracts in the futures exchange market is a way of hedging, but later both markets were attacked, and the BOT could only protect the Thai baht in both markets at the same time. This consumes a large amount of US dollar funds, which is why foreign exchange reserves will be drained rapidly.

"Due to insufficient estimates, the positions in futures exchange have hardly been flattened. At present, there are positions worth at least 20 billion U.S. dollars." After hearing this question, Malaga's heart sank, and his tone was incongruous. become unnatural.

  If the depreciation of the Thai baht is announced, the foreign exchange market will immediately fall, and then these long positions will be a big burden that cannot stop losing money.

  Because the amount of foreign exchange reserves has always been highly confidential, not many people know it, let alone those low-level traders. Most of them just obey orders and are responsible for foreign exchange transactions within a certain authority, and it is impossible for them to have access to the secrets in this regard.

"Hey..." Hawa Chachai stomped his feet suddenly, angrily angrily said: "What are you thinking about now? Don't hurry up and ask people to clear all the positions. It is a little bit that can be recovered. Wait until the position is reduced to When it reaches a certain scale, declare free floating!"

   At this time, there is indeed no better way. Except for Hawa Chachai, the other people who participated in the meeting either kept talking or kept silent, and did not have any constructive opinions at all.

   Malaga made a gesture, and a currency expert who participated in the meeting with him pushed the door out to arrange the liquidation of the position.

  The next discussion gradually shifted to the aftermath of the free floating of the Thai baht.

"According to your estimates, if the devaluation of the Thai baht is announced, what kind of reaction will the market have, or what is the expected price?" Chavalit finally spoke. Before that, he just listened silently and did not give any information. Too many opinions. But this attitude shows that Mr. Prime Minister has indirectly agreed to the free floating of the Thai baht.

Malaga looked at several other currency experts, saw that they all nodded, and replied cautiously: "20% to 30%, the specific situation is hard to say, but according to our preliminary estimate, it should be within this range. Inside."

  There was another gasp from the other end of the phone.

   This time Chavalit did not remain silent again, and immediately asked the officials of the Ministry of Finance: "If the devaluation of the Thai baht is announced, what will happen to the domestic financial institutions?"

   "The situation is very bad!" A cold voice replied without thinking. This is the new Finance Minister Kahati. Although he has only been in office for a few days, he has already had a clear understanding of the entire economic situation.

   There was another sound of gasping for air. This conference call has brought too many surprises to the participants.

Originally, financial institutions were under the jurisdiction of the Central Bank, but since many financial institutions were on the verge of technical bankruptcy, the Ministry of Finance took over these institutions and ordered them to submit restructuring plans within a certain period of time, depriving them of non-performing assets, etc., in an attempt to solve the problem in the shortest time Re-establish new institutions through reorganization, mergers and other means within a short period of time, and resume deposit and loan business.

   "What about the impact on the real economy?" Hawa Chachai said suddenly, but then he added, "I mean whether there will be a financial crisis. If so, it will be very bad!"

  Currency crisis is easy to solve, but once a financial crisis occurs, the blood supply system of the entire economic activity will have problems, which is extremely fatal and even ten or a hundred times more harmful than a currency crisis.

"..." Chavali was completely silent, and he said after a long time: "Tomorrow at nine o'clock in the morning, Kahati and Malaga, you two come to my office, and I will discuss this issue with you." Then , He called out the names of a few more people, including economists, officials from the Ministry of Finance, and tax experts, presumably to discuss matters after the announcement of free floating.

  The meeting ended so hastily, because the deeper issues were no longer suitable for discussion.

As soon as Malaka returned to the office, he saw Shawang, the vice president, coming in angrily, and shouted loudly as he walked: "Who told you to close out the long positions in the European and American markets? Who gave you this right?" ? If you don’t explain clearly, I will immediately report to Mr. Prime Minister and ask you to leave tomorrow!”

Looking at Shawan who looked like a clown, Malaga felt a sudden sadness in his heart. He was half paralyzed on the large seat, and he didn't even bother to move his hands. He just said lightly: "We have no US dollars anymore. Yes, the free float of the baht will be announced soon.”

These words were like a bolt from the blue, and immediately smashed Shawan, who was still aggressive a second ago, his face was instantly pale as paper, his eyes were as big as copper bells, and he stepped back in a "thump" After a few steps, he muttered to himself: "How is this possible? How is this possible?"

  …

  Hong Kong, inside Tianyu Fund.

  There was a large amount of Thai baht selling in the originally calm foreign exchange market, and the exchange rate price fell by several basis points one after another, which caught almost all traders off guard. While panicking, they began to ask what happened.

   "Look, what I expected has finally happened!" Zhong Shi turned his head with a smile on his face, and said triumphantly to the three people standing beside him.

  Andrew, Ma Jiarui, and Ren Ruowei looked at a long red line that instantly appeared on the board, and they were all stunned, unable to speak a word.

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  (end of this chapter)