Chapter 207 exchange for 500 million US dollars

  In order to hit the Mexican peso, Zhongshi did not hesitate to bring in Chase Bank, Standard Chartered Bank, etc. He knew that it was impossible for him to destroy a country's exchange rate system by himself.

   It is important to know that Mexico is one of the largest economies in Central and North America, and its GDP in 1994 is expected to reach more than 300 billion US dollars. At that time, Mexico’s foreign exchange reserves were as high as 25 billion U.S. dollars. In addition, in order to make up for the current account deficit in international trade, the Mexican government issued a large number of short-term bonds denominated in U.S. dollars, and the amount of these bonds reached 28 billion U.S. dollars. In addition, the total amount of US funds flowing into the Mexican stock market has reached as much as 75 billion U.S. dollars. None of these figures can be shaken by the current bell stone.

But all of this is based on the continuous inflow of foreign capital into Mexico. If the inflow of foreign capital stops or slows down, it will cause market risks. If foreign capital starts to withdraw at that time, the Mexican government is so pitiful. China's foreign exchange reserves cannot last long.

   Therefore, what Zhong Shi needs to do now is to spread the word, sprinkle a pinch of salt on the current market's vulnerability to the Mexican peso, and let the foreign exchange trading departments of commercial banks also join the short-selling camp.

  You must know that commercial banks play a very important role in currency exchange, especially in a market like Mexico with a fully open capital account. Although there are many commercial banks in a country, most of the capital is still concentrated in the accounts of a few large commercial banks. Although commercial banks such as Chase and Standard Chartered are not considered super banks in the Mexican banking system, the wave of selling dollars brought about by them is enough to make other commercial banks follow suit.

In addition, among the other 15 banks that Zhongshi borrowed from, some people will naturally find this strange. Through the transmission among peers, the foreign exchange trading department will quickly judge the situation, and then follow the entry operation, so that The impact it brings is not one-and-a-half.

  Although the Mexican government still restricts foreign banks from entering the Mexican market, there is no obstacle to the circulation of capital, which is why Zhongshi can freely convert Mexican pesos.

On Wednesday, December 14th, as soon as the Mexican foreign exchange market opened, huge sales orders appeared in the market, amounting to as much as 500 million U.S. dollars. Such a large-scale sales order surprised the participating commercial banks and asked about the reason behind it. mechanism.

  Such a large amount of sales order, if it is not a commercial bank or hedge fund, these foreign exchange traders would not believe it. But here comes the problem. If it is a commercial bank, it is likely to be a normal exchange procedure. Although the daily transaction amount of the Mexican foreign exchange market is not small, it is rare for a situation similar to the outflow of 500 million US dollars on that day. Even if there is Commercial banks that are interested in taking this sale order also need time to raise funds.

  And if it is a hedge fund with malicious intentions, then the commercial bank as the exchange counterparty needs to think carefully. Because if they take this sale rashly, they will ultimately bear the loss, because once the Mexican peso depreciates in the future, it means that their dollar capital will shrink sharply.

  The traders did not dare to neglect, and hurriedly reported the situation to the senior management of various commercial banks. It is rare for ordinary small and medium-sized banks to accept such a large-scale sale order, so this sale order stayed in the market for a long time, and finally entered the consideration of several large Mexican commercial banks.

   "We don't have a lot of US dollar capital in the bank. If it can't be exchanged, then we should go to the central bank!" Inside the Bank of Credit Mexico, a high-level and serious small meeting is going on. A middle-aged man with a mustache is quickly reporting the unexpected situation in the foreign exchange market and giving his own opinion.

  Credit Mexico is one of the few large commercial banks in Mexico, second only to several larger banks such as the Mexican Development Bank, the Mexican Foreign Trade Bank, and the Mexican Public Works and Services Bank. This time, a $200 million sale order came to them.

The person who spoke was Juan Carlos, who was the vice president in charge of foreign exchange at the Bank of Credit Mexico. When a large sale order appeared in the market for the first time, he reported the situation to the president. Big, so a small meeting was held in a hurry.

"I disagree!" A cold voice suddenly sounded, "Although this level of exchange is rare, it is not uncommon in the current foreign exchange market. With our current US dollar reserves, we are able to exchange this sale order. Why should we How about turning to the central bank and paying more interest?"

The voice of opposition comes from Dos Santos from the International Investment Department. He is an energetic and enterprising middle-aged man. So the weight of speaking is full.

"Besides, we have enough possibilities to re-buy so many dollars in the foreign exchange market. It is not a loss for us at all, and there is a large exchange fee. Why not?" Doss Santos said lightly, but anyone could hear the accusation in his tone.

Since the International Investment Department uses U.S. dollars, it takes up a lot of capital from the Bank of Credit Mexico. Other internal departments have long complained about the work of the International Investment Department, especially the foreign exchange department, because the U.S. dollar capital of the International Investment Department constrains them. In foreign exchange work, the struggle between the two departments is particularly fierce, and in this case, it is not surprising that Dos Santos has spoken out against Juan Carlos.

Although the current high-level government has two completely different views on the currency value of the Mexican peso, Dos Santos does not care whether the peso depreciates or appreciates. The currencies under his jurisdiction are all invested in US dollars. There is no such thing as question. On the contrary, the foreign exchange department under the jurisdiction of Juan Carlos needs to worry about the exchange rate issue the most, so if he can deal a severe blow to his opponent, he will naturally be very happy.

  Hearing the tit-for-tat confrontation between the two, the managers of other departments shut their mouths wisely. Although they are also somewhat dissatisfied with Dos Santos' behavior, but the performance of their investment is there. Even if they want to say something to support Juan Carlos, they must have enough confidence.

"The most important point is that if we don't exchange, then our bank's credit in the foreign exchange market will plummet, and there will even be rumors in the market tomorrow that our credit bank is on the verge of bankruptcy due to a shortage of funds. If depositors panic , when the time comes, we will come to run with all our brains, and we will really go bankrupt if we don’t go bankrupt.”

  Dos Santos's words are reasonable, and every sentence is critical, directly poking at Juan Carlos' weakness. Although Juan Carlos knew that Dos Santos was exaggerating, he couldn't bear the big hat of causing the bank to collapse. His lips twitched slightly, trying to say something, but in the end he didn't say a word.

"Enough!" Just when Dos Santos was about to press further, Harvey Bardem, the president of the Bank of Mexico, interrupted him, "According to your point of view, if the government suddenly announces devaluation, and we What should we do if we haven’t replenished the corresponding dollar capital in the market in a timely manner?”

Harvey has been watching the open and secret struggle between these two subordinates, but he has not stopped it. First, it is a healthy internal competition. All aspects of the factors into consideration, it can not favor one party.

  Seeing that the meeting was about to turn into a quarrel, he could only interrupt the secret struggle between the two sides, and began to seriously consider Dos Santos' plan. In fact, this exchange is imperative, because even if Banque de México does not exchange, other Mexican commercial banks will take over the business, because the Central Bank of Mexico is behind it, and the Mexican government promises monetary freedom Exchange, so Harvey still has great hopes for the feasibility of this business.

However, as the helm of a large commercial bank, what Harvey has to consider is not just the price difference and handling fee in the exchange business, he must grasp the balance among the liquidity, risk and profitability of the entire bank , because all three are necessary conditions for running a commercial bank well.

  500 million U.S. dollars, converted to pesos, is more than 1.7 billion, which has affected the liquidity of the Mexican credit bank to a certain extent. Although there is no problem with the peso, the U.S. dollar capital is somewhat troublesome. That's why he asked Dos Santos.

   "There is no big problem with the US dollar position." Seeing Harvey's gaze, Dos Santos said firmly.

Credit Bank of Mexico has also set up several small-scale branches in New Mexico in the southern United States. Although the performance and storage scale of these branches are very small, these small branches can directly invest in the capital market of the United States . According to the law, they have also joined the Federal Reserve's banking system and need to report their positions and margins to the Federal Reserve every day, so Harvey asked this question.

Seeing that there is no problem here, Harvey slapped the table and made the final conclusion: "Although our bank's US dollar reserves are not large, this matter is related to our reputation and credit in the foreign exchange market. My opinion is, exchange!"

  The dollars entering Mexico are converted into pesos, part of which goes into the bank's vaults, and part of it goes into the account of the central bank. In addition, most of the U.S. dollars are invested in short-term bonds denominated in U.S. dollars. The commercial banking industry in Mexico holds a lot of such bonds. In addition to exchanging them with U.S. dollars in their own accounts, This bond can also be sold in the market for exchange.

  Of course, the latter will hardly be considered, because investing in bonds has interest itself, and there are almost no other profit points for exchanging dollars except for exchange differences and handling fees.

   Even so, Harvey had to bite the bullet and carry out the exchange. The focus of the previous discussion was whether to use the US dollars in the banking system. In fact, apart from them, several other large commercial banks also had similar discussions, and the final conclusions were similar. They regarded this situation as an unexpected situation in the market. It's just that no one expected at this time that this "unexpected" situation would happen one after another in the next few days.

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  (end of this chapter)