Chapter 240 Disappeared Liquidity

   "25.904, no problem, five billion baht."

   "25.925? Three billion baht? No problem."

  …

Calls are made from within Tianyu Fund, and the amount and price of the sale are reported immediately. Almost all calls do not bargain, and now all traders have only one thought, that is, to clear their hands as soon as possible. baht.

It is already late at night, and it has been a while since the Minister of Finance of Thailand announced his resignation, but the interior of Tianyu Fund is still brightly lit, and Zhong Shi personally sits in charge. Everyone has given up rest and is looking for all possible transactions in the market regardless of work opponent.

  The foreign exchange market is a non-stop trading market, and currencies frequently flow around the world 24 hours a day. Although the Thai baht is not the main currency, thanks to the vigorous opening of the financial industry in Thailand in recent years, coupled with the vigorous economic development in the past few years, the Thai baht trading business has also expanded to a global scale.

  An important profit point of multinational commercial banks comes from currency transactions. Such transactions relying on exchange rate differences usually have relatively large transaction volumes and are relatively frequent. The foreign exchange transactions between commercial banks and the foreign exchange forward market together constitute the entire foreign exchange market.

Now the employees of Tianyu Fund are looking for counterparties who are willing to buy Thai baht in the entire foreign exchange market, because the largest market is in Thailand, but the trading hours in Thailand have passed, so they can only look for those large businesses that have business in Thailand bank.

  Zhong Shi sat on the milky white sofa chair with an uncertain expression on his face. Seeing this scene, Andrew didn't dare to disturb him, so he ran out to make a phone call with the traders.

  I have obviously changed the course of the financial market, and the future course is hard to grasp. However, one thing is certain is that although the Thai baht has depreciated earlier than in previous history, other currencies such as the ringgit, South Korean won, and Singapore dollar will inevitably be affected.

   "Zhong Sheng, it's almost time!" Just as Zhong Shi was thinking wildly, Andrew knocked on the outside door, then walked in, reminding him softly.

  Zhong Shi was startled, then raised his head and looked at Andrew with a puzzled expression.

   "At present, in the spot foreign exchange market, we have suppressed it to the level of 26 baht to 1 US dollar, and there is no counterparty. I am afraid that we will not be able to continue selling until tomorrow." Andrew frowned, his expression a little confused.

  According to the general logic, even if the Thai baht is not the main foreign exchange currency, the transaction volume between commercial banks is not so small. By the time the baht fell to 26 baht to the dollar, he and other traders had only sold 35.7 billion baht, less than a fraction of the entire position.

  What he didn’t know was that the sudden announcement of the resignation of the Thai Finance Minister made the entire market in a state of panic. After the initial purchase, when the spot exchange market reached the lowest limit of the Thai baht, the trading department of the commercial bank began to be cautious. Because if the Thai baht bought at the current price cannot be sold at a slightly higher price tomorrow, it can only be sold to the Bank of Thailand BOT. In this way, they have no exchange difference to earn.

   There is another reason for this, that is, when Tianyu Fund began to sell Thai baht on a large scale, HSBC and Standard Chartered immediately noticed the market trend, because they also have branches in Thailand and have related Thai baht exchange business. When there were unusual fluctuations in the market, they immediately asked traders to find out who was selling, and at the same time notified their own foreign exchange trading department to prepare.

  After several trials, they found that Tianyu Fund sold regardless of cost. As long as it was more than 26 baht, they would not bargain at all, and they did not even discuss the price of a basis point, and reached a deal directly. They quickly understood that this was Tianyu Fund's rapid shipment.

  Time passed bit by bit, and Tianyu Fund's selling showed no signs of stopping. It had already lowered the price of the Thai baht by more than ten basis points, but they still did not stop.

  In the past, HSBC, Standard Chartered and other banks could buy at a lower price from Tianyu Fund, and then sell it at a higher price. But when they bought part of the Thai baht, they went to other markets to inquire, and found that Tianyu Fund also called these commercial banks for trading, and the other party also bought a lot of Thai baht. The price was almost the same as theirs, so there was no transaction. leeway.

   Soon, the price of Thai baht sold in the spot foreign exchange market fell rapidly, but there were still a steady stream of selling orders of Thai baht, as if the short sellers had endless funds. When the Thai baht fell to 26 baht to 1 dollar, the liquidity of the entire Thai baht foreign exchange market disappeared. Yes, disappearance, not lack!

  At this time, within the various commercial banks, the attitude towards the Thai baht is already at a respectful distance. Originally, they could sell the Thai baht bought at the original price at a par price, but there is a lower price of Thai baht in the market, and they can only wait for the price of Thai baht to rise if they want to reduce this part of their position.

For example, the Thai baht that was originally bought at 25.904 baht for 1 US dollar can only be higher than this price if you want to make a profit, but the market is full of 26.2 baht for 1 US dollar, which makes it impossible to trade the high-priced Thai baht . The steady stream of selling further dragged down the value of the Thai baht, which eventually fell to 25.995 baht to the dollar.

  At this price, except for the exchange fee, there is no room for profit. Naturally, there is no possibility of trading. As a result, liquidity in the entire market disappears.

  This situation is not the result of Tianyu Fund, but the entire market is jointly caused by the pessimism about the situation in Thailand. In fact, in markets such as Europe and the United States, related sales are also being carried out simultaneously. Soon, commercial banks, the main force of transactions, found that cheap Thai baht was everywhere in the market, which made them quickly give up the idea of ​​buying, and instead waited for the Bank of Thailand to intervene in the market the next day.

  Because of all this, the ultimate buyers will be the central banks, because they are the banks of the banks, the lenders of ultimate lenders.

As the price of the spot foreign exchange market fell, the price of the futures foreign exchange market also began to approach the minimum limit set by the Bank of Thailand. The price difference is pulled back to the same level.

   It's time to defend the baht again!

   "Lost liquidity so quickly?" Zhong Shi frowned and said very dissatisfied. But he also knew that this was impossible, because Thailand, the main trading market, was in a state of rest, and the trading volume of Thai baht in other markets was not too large. Who made the Thai baht not the main currency?

   "Yes!" Andrew nodded, and continued, "Our position still has less than 80 billion baht. According to the current speed, I am afraid it will take several days to clear it!"

   "It's annoying!" Zhong Shi said insincerely, pinching his brows. Now he has changed from worrying about the depreciation of the Thai baht to being unable to clear his current position, although this part of the position is only a repayment of part of the fixed interest.

  Andrew was naturally speechless, so he could only stand aside awkwardly, with an embarrassed expression on his face.

   "Let the traders rest first, and wait until tomorrow to sell with all their strength." Zhong Shi thought for a while, but in the end there was no good way, he could only let the exhausted traders rest first.

  …

   "The attack is coming again!" This was the first reaction of the BOT traders when they saw the price of the Thai baht against the US dollar falling back to the critical point. In one night, it fell from 25.899 the previous day to the level of 25.998, which is considered a big drop.

  All of this is naturally due to the sudden resignation of the Thai Finance Minister. Although it has only been two weeks since Thailand announced that it successfully defended the baht, the pessimism in the market has not dissipated, and now, there is even a growing trend.

   "Here is yesterday's data, let's take a look!" Last night, BOT traders also intervened in the financial market, but they intervened in the foreign exchange market. It’s just that they spent millions of dollars in funds to only increase the price of the Thai baht by a dozen basis points, but this increase quickly fell back, because a large number of selling in the foreign exchange market directly affected the futures exchange market. price.

  Traders in the daytime trading turned on their phones, checked a series of data, and found that the opponent’s trading volume was not large, but in the middle of the night, the Thai baht contract that had just improved suddenly fell sharply, and there was no sign to follow.

  The only major event that happened yesterday was the resignation of the Thai Finance Minister. However, this impact should be apparent after the opening of the European and American markets. The adjustment of the Thai baht currency value should be in place in one step. It is unreasonable to wait until midnight for a sharp drop.

   "What about the spot foreign exchange market?" Just as many traders were still looking for the reason, a trading executive interrupted their thinking and made them suddenly realize.

   "Boys, it is estimated that there will be a large-scale selling phenomenon today, and everyone needs to work hard." Although the traders are well aware of what will happen today, the person in charge still wants to remind.

  Traders nodded their heads one after another. They had experienced the tragic battle in May, so naturally they would not pay attention to the upcoming situation. In their view, the Thai baht may already be at ease.

As for the Thai local banks, when the business hours of the foreign exchange market came, there were countless calls to sell Thai baht. Naturally, they were buyers in the market that lacked liquidity yesterday. Sell ​​the Thai baht in your hand immediately. This is not because of worrying about the depreciation of the Thai baht, but hoping to sell at a higher price to earn the exchange rate difference.

Originally, the exchange rate prices of the two parties should be the same, but everyone knows that the BOT will definitely enter the market to intervene, so the Thai local bank will give a higher price based on its own estimation, and then sell it after the BOT enters the market to intervene , so naturally also earned a foreign exchange difference.

   Liquidity, just like that.

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  (end of this chapter)