Chapter 229 Thai counterattack

  Although it is only an insignificant drop of only 4% in the literal sense, the futures contracts in the foreign exchange market are completely different from other varieties. This is a circle mainly composed of foreign exchange traders. In other words, not any organization or individual can enter if they want to.

  In this circle, the active ones are funds, large multinational commercial banks, import and export foreign trade companies, and the central bank. Every character is rich and powerful, otherwise he would not be able to support a contract with a bid amount reaching millions of dollars.

  To give a simple example, the underlying amount of a yen contract traded at IMM is about 100 million yen, which is about 1 million U.S. dollars in U.S. dollars. Unlike the foreign exchange market and the bond market, there is no limit to the floating of free currency, which means that every percentage point of fluctuation represents a loss or profit of tens of thousands of dollars.

   In terms of margin, it is naturally not like the bond market where you can use extremely high leverage. Generally speaking, the margin of each contract is at least maintained at about 10%. In other words, at least hundreds of thousands of dollars of funds are needed to buy and sell first-hand contracts.

  With such a high threshold, the weight of the roles that can participate can be imagined.

In order to pull the Thai baht contracts on the SIMEX market to normal levels, BOT has used hundreds of millions of dollars in capital during daytime trading hours. Even so, it can barely pull these contracts back a little. How fierce the offensive is. What's more serious is that in the spot foreign exchange market, the consumption of this day alone has used BOT's funds of more than 6 billion U.S. dollars, and there is no doubt that it will be hit more seriously in the future.

  For such a menacing impact, Thailand will definitely not sit idly by. Therefore, after the start of trading hours in London, the market was surprised to find that the Thai baht contract traded on LIFFE rose instead of falling, and hit a new high in the past month, hitting 25.99 Thai baht to 1 US dollar.

   This price has wiped out the previous efforts of the bears, and the market has predicted that there will be news from Thailand soon, otherwise the market will not rise against the trend when SIMEX hits a new low.

Sure enough, in the middle of the night, that is, in the early hours of May 15, the Bank of Thailand told the media and major commercial banks by phone that Thailand will defend the baht at all costs, and has prohibited local banks from lending short-term funds to foreign investors, and will offshore The overnight lending rate was raised sharply to a height of 1000%.

  These two news greatly encouraged the market's confidence in the Thai baht, and then in Chicago, the Thai baht contract also began to strengthen upwards, gradually returning to the fluctuation range stipulated by the Bank of Thailand.

  …

   Time went back to three hours ago, when Zhong Shi was eating at home, a familiar figure suddenly appeared on the TV in the living room. Zhong Jianjun looked up and couldn't help feeling a little strange. He asked Zhong Shi, who was working hard, "Isn't this the one who came to our house two days ago?"

   "Huh?" Zhong Shi raised his head, wiped the oil stains around his mouth, and then looked at the TV, only to find that Andrew was wearing a neat suit, and was seriously analyzing the recent trend of the Thai baht on the ATV financial program.

"International capital, especially hedge funds, have been coveting Thailand's currency system for a long time. As early as January this year, they launched an attack on the Thai baht, but the result was not as they expected. This time, they are not dead , gathered another group of funds, and wanted to destroy the Thai baht in one fell swoop. The drastic changes in the market today were caused by them. First, they released false news to cause panic in the market, and then they shorted the spot and futures markets at the same time. Due to Thailand Banks need to take over their sales in the spot foreign exchange market. In order to maintain foreign exchange reserves for hedging, the Bank of Thailand needs to buy US dollars in the futures foreign exchange market. Therefore, the Bank of Thailand has become the target of their double attack. So today’s Thai baht market appears A drastic move because on this day they also sold a lot of baht in the spot market.”

"How did the baht they sell come from? This is easy to explain. They use funds or assets in domestic banks as guarantees to borrow from banks that have business in Thailand. The loans are mainly short-term loans. Hedging Funds sell by borrowing Thai baht, and then buy after the Thai baht falls, and the exchange rate difference between them is the source of their profit."

   "This kid is right!" Zhong Shi nodded, subconsciously exclaiming.

  Zhong Jianjun was a little dissatisfied, and muttered: "What kind of stuff are you talking about? Why can't you understand a word? Hey, you don't have any business dealings with him, do you?"

  Although in the past few years, they have gradually known that Zhong Shi is engaged in financial business, but they don't understand finance at all, and Zhong Shi naturally didn't explain it in detail. For people of this generation, increasing income and reducing expenditure is a more recognized view of money, basically a way of life where one penny is spent and one penny is spent. And what Zhongshi is doing now is to use leverage everywhere. To make them accept investment in the form of borrowing (and it is not a risk-free investment that is put in the bank to collect interest) is definitely a task that is even worse than reaching the sky. difficult things.

"Dad, you see everyone is on TV, so it can't be a liar, right? The TV station will not follow suit, right?" Zhong Shi retorted dissatisfiedly, and then explained, "This person also It’s a friend of mine who has a relatively large business, so the TV station invited him to be a guest.”

Zhong Jianjun tilted his head and thought for a while, before saying after a long time: "That's true, the TV station will never lie." After finishing speaking, he looked at Zhong Shi, and then at Andrew, who was talking on TV, still feeling a little dissatisfied. rest assured.

  Seeing Zhong Jianjun's appearance, Zhong Shi quickly changed the subject: "Dad, Mom, I heard that Brother Zhong Yi recently bought a yacht. When we have time, let's go out to sea together?"

"Yacht? Just like on TV?" Zhong Jianjun's eyes lit up, his tone revealed unexpected surprise, and then he said with some emotion, "Look at how capable you are, if you are half as good as him, I will Very satisfied."

Liu Lan put down the bowls and chopsticks, glanced at Zhong Jianjun with some displeasure, and said in a serious voice: "Let's talk about it later. Little Shitou, your sister will graduate soon. I'm thinking about bringing her to Hong Kong when the time comes. You Is there any good way to find her a job first?"

  Different from the carefree Zhong Jianjun, Liu Lan has long realized that her son is doing a great job outside. When Andrew and others came to visit that day, she secretly saw from a long distance away that Andrew and Liao Xiaohua were respectful in front of Zhong Shi, without the slightest attitude that Zhong Shi said "friends" should have.

   "This matter is on me." Speaking of Zhong Xiaohui, Zhong Shi also felt a little guilty. After she graduated from undergraduate, Zhong Shi once wanted her to come to Hong Kong, but Zhong Xiaohui insisted on finishing her postgraduate courses. Two days ago, he was on the phone with Zhong Xiaohui, and she seemed to want to continue his doctorate, but he hadn't made up his mind yet. Now that she heard that she was going to end her student career, Zhong Shi was naturally very happy.

  Seeing that Zhong Shi readily agreed, Liu Lan stopped talking. On the contrary, Zhong Jianjun was a little strange. He looked at Zhong Shi, who had a serious face, and then at Liu Lan, but gave her a sudden stare, so he buried his head and continued to eat.

On TV, Andrew continued to analyze: "I believe that the Thai government will not sit idly by. There are reasons to think that they will crack down on speculative international capital in the near future. Based on past experience and personal judgment, I think the Thai government will significantly Raise interest rates, and at the same time prohibit local banks from issuing short-term loans to foreigners. As for whether they will do so, it depends on Thailand's reaction in the next few days."

"Okay. We thank the senior investment director from Tianyu Fund. Next, we will invite another senior analyst from the financial industry from..." The beautiful hostess interrupted Andrew's conversation at the right time, Turn to introduce another guest.

   "Now Andrew is going to be famous!" Zhong Shi swallowed the last grain of rice, thinking to himself.

   Andrew's appearance this time was naturally arranged at the behest of Zhong Shi, and the purpose was naturally to expand the influence of Tianyu Fund. Although what he said were all short-selling techniques that people in the industry are familiar with, it is definitely an eye-opener for ordinary investors who have little knowledge of hedge funds.

  Just a few hours later, the Thai government took countermeasures as Andrew said, which made Andrew and Tianyu Fund suddenly become hot topics in Hong Kong's financial circles. The next day, some investors called the TV station, hoping that Andrew, the investment director, would continue to be a guest on the financial program. And soon as more prophecies came true, Andrew wandered among the financial programs of various TV stations and became a momentary celebrity.

  …

  As soon as the market opened the next day, SIMEX’s Thai baht contract quickly rose from 26.41 Thai baht to 1 US dollar at the close yesterday to 25.99 Thai baht to 1 US dollar, an increase of 1.55%. However, the short-selling party still did not give up, and made another day-long violent impact on the Thai baht from the two markets. It is a pity that this time they encountered the joint intervention of the two central banks. The Monetary Authority of Singapore and the BOT made repeated moves, using a total of more than 14 billion US dollars of foreign exchange reserves, not only firmly fixed the Thai baht within the specified fluctuation range, and even The quotation of the Thai baht in the spot exchange market has also slightly increased the exchange rate of the Thai baht, which has caused a double blow to international speculative capital.

   "Damn it, what we expected has happened!" In New York, Julian Robertson slapped the desk in front of him fiercely, saying extremely unwillingly.

   Now, Tiger Fund is facing not only losses from the futures market, but also high offshore lending rates. The interest rate was so ridiculously high that Robertson, who had always been moody and angry, also cursed.

  (end of this chapter)