The Son of Finance of the Great Age

  Chapter 97 The British pound has collapsed (3)

  After liquidating all the treasury bond futures at a price slightly higher than the market price, Zhong Shi’s account had an extra ten million pounds, and all of this was obtained within more than an hour.

Afterwards, the British regulatory authorities conducted a secret investigation into this strange transaction, but the Prime Minister's temporary interest rate increase was agreed upon repeated requests from the Chancellor of the Exchequer, Lamont. Therefore, the investigation was finally shelved.

  The funds quickly flowed into the British stock index futures market.

  The underlying stock index futures in the UK are the Financial Times 100 Index, that is, each index multiplied by ten pounds is the value of the real-time contract, and the leverage is calculated, which is similar to the current index price.

  The trading of FTSE futures is very developed, and the transaction amount last year reached as much as 85 billion pounds. In this market, since the starting point for participation is relatively low, there is no limit on the price increase or decrease, and there is no limit on the number of positions held, so there are many participants in the market.

When Zhong Shi and Andrew came to the stock index futures trading department, the stock market fell due to the sudden rise in interest rates, and the stock index futures bulls frantically closed their orders in the market. Sell ​​long orders at a low price to lower the average price of your own positions, and the short sellers who have done the right direction will take advantage of the victory to further expand their victory results, and a small number of short sellers will close their short orders to stabilize their profits. Get it.

  In short, the trading volume of the stock index futures market has rapidly increased in the past few minutes, which has also accelerated the decline of the index in some respects. The current bulls urgently need financial support.

  Blockstone's funding fits right in.

   "Buy 1,000 lots at 2310 and execute immediately." When Zhong Shi saw the long negative line appearing on the screen, his face was overjoyed.

  The real-time Financial Times Index has fallen below 2300 points, and it is still falling. Due to the premium, the value of stock index futures is a little higher than the real-time index, but it will soon fall below the psychological barrier of 2310.

  When there was a long order of 1,000 lots at 2310 in the market, it was quickly overwhelmed by the surging sell orders. Basically, it was only a small wave, and the index was still falling.

   "2309, two thousand lots, continue to buy!"

   "2308, three thousand lots, increase the position!"

   "2307, three thousand lots, continue to buy!"

  …

  As one order after another was issued, traders quickly typed out buying and selling orders on the screen, and these long orders were supported at one price level, gradually suppressing the downward momentum of the stock index.

With the entry of Zhongshi, people who have been observing the market with funds in their hands began to move. They obviously found that the bulls began to exert their strength. Pausing momentum.

  These retail investors began to try to buy long orders. Although the number of hands was not large, it could not affect the overall situation, but the market clearly smelled the stock market turning.

   Short sellers naturally understand this, and they are absolutely unwilling to be suppressed by the sudden bad news. In fact, if they stop at this time, they will make an average profit of more than one hundred pounds per contract.

But these short sellers are not reconciled. In their view, this point of decline is not enough to make up for the losses in the past half month. Since September, the British stock market has risen by more than 100 points. The cost of opening a position at the beginning of the month was recovered.

More importantly, the huge positions they hold will not be able to be liquidated at all for a while, because if they close their positions at this time, it will definitely cause the bulls to counterattack frantically, not to mention the profit of one hundred pounds per contract, It's hard to tell even half of it.

  The market is like this. The power of both sides is one and the other is rising and falling, and finally they must be in a balanced position.

   "2300, 10,000 lots!" Seeing that the index was still falling slowly, Zhong Shi gritted his teeth and reported a number that surprised Andrew.

A contract of 10,000 lots is basically 23 million pounds. Counting the funds invested before, nearly 50 million pounds have been invested in Zhongshi's account, and the remaining funds are only about 10 million pounds. This part of the funds is not big It may be disturbed, because the security deposit must be paid at any time.

  The 10,000-lot sell order appeared in the market, which immediately caused an uproar. The bulls have already nakedly expressed their confidence in protecting the market, and continuously invested heavily.

This price is an important psychological threshold. After Zhongshi’s long position of 10,000 lots appeared in the market, the bulls finally began to exert their strength after a temporary patience, followed by Zhongshi’s long position at 2300, and finally Successfully stabilized the futures index at the 2300 position.

   On the other side of the stock market, the index was set at 2291 points, and the horn of counterattack sounded.

After the bulls established their position, they began to counterattack. One after another, sell orders appeared in the market, and soon recovered some of the lost ground. The index started to go up from 2291. In the next hour, the two sides conducted a fierce offensive and defensive battle. The price of 2300 was reached at noon.

   As for the stock index futures, the short sellers were not very consistent at 2300, and they did not suppress the price of the stock index futures below 2300 under a little carelessness. As a result, the market recovered in a blink of an eye. After a slight adjustment, short positions also began to build a large number of positions, and the two sides finally saw-saw back and forth at the 2320 point position.

   Now both sides are in a situation where the attack is weak and the defense is insufficient. They are all waiting for news, waiting for a news that will make the market change again.

  The source of this news is the foreign exchange market, whether the Bank of England can withstand the pressure of foreign exchange speculators to sell.

  What most of them don't know is that at this time, the British Chancellor of the Exchequer, Lamont, already has the idea of ​​​​giving up the pound and **** the mark.

   The essence of this idea is that the pound exits the European exchange rate system.

  In the past few hours, the Bank of England once again bought 3 billion pounds in the market, but it still couldn't resist the surging selling orders in the market. The time left for Lamont is simply not enough for him to discuss countermeasures with the finance and central bank governors of several other countries in the European exchange rate system.

Now Lamont is distraught, and at this moment he is even a little envious of Italy's situation last week. At that time, the Italian lira was attacked frantically on Friday, and they could still have two days to negotiate with several other European countries, and then make a decision. Measures to depreciate the lira and cut interest rates by the Bundesbank.

But for the United Kingdom, today is Wednesday, which means that the pound will be under pressure from various foreign exchange markets around the world. The only thing Lamont can do now is to unilaterally announce its withdrawal from the European exchange rate system to reduce the pressure from the depreciation of the pound .

  The current situation is that the Bank of England must follow up every sell order for the pound/mark exchange rate at 2.7780 in the market, otherwise the pound will exceed the lower limit stipulated by the European exchange rate system.

  The decision to withdraw from the European exchange rate system must be decided by the Prime Minister, and Lamont must explain to Major as soon as possible the crisis and urgency of the current situation.

  Every minute of waiting now costs the UK tens of millions, or even hundreds of millions of pounds.

   However, the phone to the Prime Minister's office was not answered, and the Prime Minister was not there. Lamont led his team of advisers to search everywhere, and finally found the Prime Minister in the Admiralty Building, which was the Prime Minister's temporary official residence. But here, they waited for nearly fifteen minutes before Major received them.

Major did not realize the urgency of the situation at all. He first asked whether there was room for further financial diplomacy with Germany, and then summoned several ministers to discuss the current situation. The main content of the discussion was that Britain would withdraw from Europe at this time Will the exchange rate system offend its European partners? If it really wants to withdraw, will other ministers propose to resign and other political considerations, without any concern that this country has spent every minute and every second in the past? loss of wealth.

  At the same time, foreign exchange dealers are still selling pounds and buying marks in the market, continuing to put pressure on the Bank of England. On Wall Street, those short-selling hedge funds have successively increased their positions. They have understood from the first rate hike that it is only a matter of time before the Bank of England is defeated.

  The meeting between Lamont and the Prime Minister finally came to an end. The final result of the meeting was that Prime Minister Major insisted on raising interest rates instead of withdrawing from the European exchange rate system. It's just that this time, in order to avoid a sudden shock to the market, it was announced immediately, and the interest rate was raised by 300 basis points, which took effect the next day.

  In one day, the interest rate was raised twice, raising the interest rate from 10% to 15%. This is unprecedented in British history, and it also shows that the situation in the foreign exchange market is indeed very critical.

   What made Lamont feel desperate was that when he looked at the exchange rate of the pound again, it was still a straight line, and there was still no reaction. He began to call the finance ministers of other countries in the European exchange rate system one after another. After describing the current difficulties faced by the pound, he once again hinted that the pound was about to withdraw from the European exchange rate system.

   What made him feel dumbfounded was that Italian Finance Minister Piero Balusi proposed on the phone that he should temporarily suspend trading in the pound in exchange for more time to negotiate. What Barusi doesn't understand is that the modern treasury minister simply doesn't have the authority to shut down a market that runs 24 hours a day.

  The response of the UK to raise interest rates again has strongly stimulated foreign exchange speculators. They know very well that this is the time to "kill you while you are sick", and the British government can no longer sustain it.

The selling wave in the market became more turbulent and huge. By the time the market closed at 3:30 in the afternoon, the pound was barely maintained at the price of 2.7780 under the vigorous buying of the Bank of England, but the Bank of England had already spent more than 20 billion US dollars. foreign exchange reserves.

   Lamont knew very well that the Bank of England's foreign exchange reserves would not be enough in another day, even with the support of other European central banks.

On September 16, 1992, at 7:30 p.m. London time, Lamont held a press conference at the Ministry of Finance and announced in front of more than 200 journalists around the world that the UK unilaterally withdrew from the European exchange rate system and canceled Two hikes today.

   This time, the Prime Minister finally made the right decision, but the price of this decision was too expensive, worth more than two billion U.S. dollars. (First of all, I would like to thank the book friend, The General in the Sunset, for his reward and evaluation of this book! In addition, please ask for Sanjiang Tickets... everyone will work hard to support it on the last day... The author has been exhausted from coding these days, and today he actually dropped one Bit...please support me at the end...thank you~)

  (end of this chapter)