The Son of Finance of the Great Age

  Chapter 259 The Thai Baht Crash (4)

  General currency contracts have relatively low margins, usually with leverage between ten and one hundred times. Of course, the leverage can be enlarged again through the broker, but it must be when the account is profitable. Once there is a loss, these brokers will not provide leverage anymore, but will ask for additional margin in order to control the risk.

  In addition, due to the recent abnormal fluctuations in the Thai baht contract, the exchange has also increased the proportion of margins, trying to control the risk of default, and to a certain extent eliminated the possibility of some speculation.

  At this time, Jim has fallen into a state of madness. He didn't expect the worst result at all, and only thought about using the intervention of the BOT to make himself overcome the current level.

And the slowdown of the downward trend he saw was actually the behavior of arbitrage funds with the same thoughts as him. They were also delusional about lowering the price by increasing their positions, and then took the opportunity to escape when the BOT intervened. , so temporarily stopped the downward momentum, unexpectedly gave people like Jim a superficial illusion, and made them sink deeper and deeper.

  Of course, there are also people who saw the bad momentum and chose to leave the market at a loss immediately.

  …

   "It's 26.5, and the downward momentum hasn't stopped. Is it really about to happen?" The four of them had been sitting in front of the computer in Zhongshi's room, watching the instant changes of the Thai baht contract on the screen.

   So far, it has fallen by more than 1.1%. Although there was a rebound during the period, this rebound was soon overwhelmed by selling again, and the Thai baht once again pulled out a long red line.

   "Go all out to short the Thai baht futures contract. If my prediction is not unexpected, it is already very difficult to buy long positions." Zhong Shi said with a smile, but there was no sense of anxiety in his tone.

   At this time, the general situation is basically set, and we are waiting for Thailand to announce the devaluation.

  …

  Bank of Thailand, Office of the Governor.

  Shawang's face was ashen, and he slumped on the sofa. He had maintained this posture for a while, and he became like this since he heard that the Thai baht could not be held.

   Malaga was in his place, silently reading the draft that he had made in his heart, and later he would notify the banks that the Thai baht would no longer be pegged to the US dollar, and explain the specific reasons. Although he can announce it casually, it will arouse the market's infinite reverie, because before that, they claimed that they have enough ability to defend the baht, and it is really unreasonable to announce that they will abandon it all of a sudden.

"Why did you announce your abandonment all of a sudden?" Shawan was still talking about it. He couldn't figure it out. Just the day before yesterday, Mr. Prime Minister vowed to defend the Thai baht. He didn't expect to announce his abandonment today. , what is going on here?

  Thinking of this, he suddenly stood up, rushed in front of Malaga, and said angrily: "Did you make a private decision? You lied to the Prime Minister, how could it be possible to say that the depreciation is depreciated?"

Malaga just felt upset for a while, and didn't want to talk to him at all, so he had to say: "You can check the data on foreign exchange reserves, and you will know what happened recently. Now, I will no longer hide from you Now, in addition to being able to withdraw part of the US dollar reserves from the foreign exchange market, the current US dollar funds in the central bank are even less than 300 million US dollars."

  Although Shawan is the vice president, his viewing authority on foreign exchange reserves has been raised to a higher level during this period, and only a few people can view it, not including him. At first he was still brooding over this, but only now did he realize that the plot had been arranged long ago.

He has always been very ambitious and wanted to replace Malaga through Chavalit, but now the situation is very clear, Malaka may resign in a short time, and the Chavalit cabinet is in big trouble . Although Shawan is now switching to an administrative job, his academic quality has not been lost at all. Then the currency crisis turned into a financial crisis, and then the central bank governor will be struggling to put out fires everywhere. It is a thankless job.

  Not to mention the central bank, but no one knows what the incoming new government's attitude towards the financial crisis will be. It is still unknown whether the financial crisis will be resolved smoothly. For the first time, Shawan extinguished the idea of ​​wanting to be the head of the central bank.

   "President, the current price is close to our bottom price, and you still continue to close the position?" The door of the office was pushed open from the outside. It was the currency adviser who had been asked by Malaga to urgently deal with the futures position.

Malaga thought for a while, knowing that the current liquidation behavior may cause speculation from all sides in the market. If the liquidation continues at this time, there may be a large-scale exchange in the spot foreign exchange market, although the peak transaction in the spot foreign exchange market is During the Asian session, if European and American banks offer to exchange Thai baht at this time, the BOT cannot refuse. After all, the foreign exchange market is a 24-hour market.

   Once the spot foreign exchange market exceeds the limit, it will not be able to return to the specified fluctuation range in a short time, and the market will collapse immediately. Before they announce, the Thai baht will be broken. At that time, the foreign exchange market will plummet, not only can't get out of the position, but even a big loss.

   "Let them control the speed of closing positions, and must support the closure of the mature foreign exchange market." Malaga issued an order decisively.

  BOT’s positions in London and New York are not too large, but the price level of market transactions here is an important wind direction indicator, which affects the price level of the Asian market the next day. Now that they can't care about the positions in the Asian market, the BOT is not afraid of having no funds to repay the losses of the exchange. As long as the exchange rate stabilizes again, they can buy US dollars through the foreign exchange market.

  …

With the slowdown of BOT's liquidation, the futures price also began to rise slowly, which gave Jim the hope of a comeback. At this time, the immediate forward price of Thai baht had fallen to the level of 26.74 Thai baht to 1 US dollar, a drop of 2.21%, plus their leverage, the loss has reached a staggering 23.41%. If there is no capital injection again, I am afraid that their positions will be forcibly liquidated by the broker.

"The opportunity we have been waiting for has finally come!" After seeing that the decline of the futures exchange contract finally slowed down, Jim was greatly relieved, thinking that BOT's actions today are really slow, and if they don't rescue the market, he will die. I'm going to jump off a building.

   But what made him dumbfounded was that the rebound of the Thai baht was only a blink of an eye, and soon, the market quotations fell again. This made his eyes go dark, and he passed out directly.

  …

U.S.

  When there were unusual fluctuations in the current foreign exchange market, the traders of Quantum Fund and Tiger Fund discovered it immediately and reported the situation to the senior management.

At this time, the same idea appeared in the minds of Druckenmiller and Julian Robertson, that is, there was another attack in the market. The number of sales has not yet shaken the status of the Thai baht at this time.

   "What's the situation? Our traders are attacking in the foreign exchange market?" Julian Robertson asked quickly. Billy King was in charge of this aspect. When he saw the big boss asking, he shook his head, indicating that there was no such action.

   Seeing his denial, Julian Robertson fell into deep thought. His thought didn't last long. After a few minutes, he suddenly realized that he gave an order to sell Thai baht.

   Inside the Quantum Fund, Druckenmiller also came to the same conclusion and began to sell Thai baht at the minimum price stipulated by Thai baht.

In the spot foreign exchange market, when the news that Tiger Fund and Quantum Fund sold a large amount of Thai baht at the same time came out, traders naturally attributed the plunge in the futures foreign exchange market to them. Although this did not explain anything, foreign exchange traders They acted one after another, followed behind them, and sold a large number of Thai baht in the foreign exchange market.

  …

  The price of Thai baht in the foreign exchange market just passed the lowest point in May, and there was a large number of selling orders in the spot foreign exchange market immediately. The Thai baht holders who were hesitant before saw the performance of the foreign exchange market, and they were scared out of their wits. This decline exceeded the peak period in May, which made them lose their confidence in the BOT in an instant. Frantically scouring the market for buyers of baht. Different from hedge funds such as Quantum Fund, they don't care about the price at all, they all sell at the lowest 26, and even lower quotations appear, forcing the BOT to make a move.

   As for BOT, they are also looking for buyers of Thai baht.

  Asian time, at 4:00 in the morning, BOT traders were still making frequent calls, looking for potential buyers of Thai baht in the market. The price they gave was 25.99, which had been approaching the specified level indefinitely. But what makes them feel desperate is that there is no buyer for this price in the market. The Thai baht at 25.99 to 1 US dollar is everywhere. No one will be willing to buy the higher Thai baht. Make counterparties more cautious and cautious when choosing currencies.

   "Directly drop to 26." At this time, Malaga also went into battle shirtless, and with a ruthless heart, he lowered the quotation level to the lowest level. At this time, there is not much trading time for the futures market. Their positions still have a total of 400 to 500 million U.S. dollars that have not been liquidated, and once the depreciation is announced, these funds will immediately be reduced by half or even more.

  Finally, after the end of the foreign exchange market, they did not liquidate all their positions, because they had to maintain the illusion of the current market, and they tried their best to maintain the final closing price at 26.80 baht to 1 US dollar. This price is even lower than when it was attacked in May.

  Traders immediately fed back the latest quotations to the market, but still could not find buyers. The market is flooded with offers of 26 baht to 1 US dollar, usually only the BOTs would buy it, and now they have no US dollars to do this kind of transaction, that is to say, the only buyer in the market is gone.

"Is there any buyer? Where can I find a buyer?" Malaka asked the traders around him loudly. Seeing them shaking their heads, knowing that the situation was over, a sense of sadness rose in his heart, as if something in his body suddenly Being taken away, even his face instantly aged a lot. When the last effort failed, Malaga could only sigh dejectedly and said, "Announce the abandonment of the peg!"

On June 16th, at 4:30 in the morning, BOT notified commercial banks by telephone that BOT had no capital to support the exchange rate level of the Thai baht. free float in the market.

   THB collapsed!

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  (end of this chapter)