In his office at Longteng headquarters, Lin Zhiyuan read out a series of newly released reform and adjustment measures from the Ministry of Finance of Country H.
The mention of raising bank interest rates made Lin Zhiyuan's heart skip a beat. "Does this mean that the cost of borrowing funds for shorting the H country market will increase?"
Chen Dong smiled and said, "The interest rate has suddenly risen by 8%. Based on the size of our current short positions, our holding costs will increase by at least one hundred million US dollars."
"This is just the cost. If you include the handling fees and deposits, it will be at least 150 million less."
Upon hearing this, Wangcai was even more confused. "So, are we still holding onto our short positions?"
Chen Dong shook his head with a cold laugh, "You take a look at what other conditions the International Monetary Fund has put forward."
"The second condition," Lin Zhiyuan turned his gaze back to the newspaper, "is that the H country government achieve perfect free convertibility of its currency."
Wangcai couldn't help but complain, "Isn't this just transplanting the free market model to Asia?"
"The H country's currency market previously operated with a limited fluctuation range, but even so, the Korean won market was still suppressed by us and could not rise."
"If we can maintain complete currency convertibility, that would be an absolute boon for us!"
Implementing free convertibility of the currency means that the Korean won's exchange rate will face significant fluctuations in the short term.
This move is like adding insult to injury for the already depreciating Korean won.
Most importantly, it also makes things easier for international speculators, allowing them to control the Korean won currency market at will.
"What is the third condition?" Wangcai asked curiously.
"The third condition is to relax regulations on the financial sector..." Lin Zhiyuan read this aloud, and even he himself could hardly believe it.
He looked at the newspaper again.
This newspaper was translated from Korean into Chinese, but even looking at the Chinese version, Lin Zhiyuan could tell from the lines that the report used subtle and euphemistic language.
The main subject emphasized in the newspaper was the government of Country H, not the International Monetary Fund.
Moreover, regarding the reports on the conditions, they did not directly state that the conditions were put forward by the International Monetary Fund. Instead, they emphasized that the stock market rescue policy was decided after discussions between the IMF and the Hong Kong Monetary Authority.
"This means that there will be fewer restrictions when we enter the H country's currency market in the future."
Lin Zhiyuan looked at Chen Dong and said, "It seems that the International Monetary Fund is on the side of international speculative capital."
Chen Dong sat up from the recliner and casually grabbed a handful of sunflower seeds and put them in his mouth.
"The IMF made it clear in advance that this international aid was intended to help H country's economy recover and to enter H country's market."
Chen Dong finally saw through their true colors. "If they really had the intention, they would have directly transferred the funds to the accounts of the Hong Kong Monetary Authority and the H Country Asset Management Company, allowing the H Country government to formulate its own economic adjustment policies."
"But with these conditions added, international aid funds have become a weapon to hold the H country government hostage."
Chen Dong cracked sunflower seeds and joked, "Is the International Monetary Fund offering timely help or taking advantage of a crisis?"
Wangcai frowned. "This is outrageous! I can tolerate the first two conditions, but the third one... isn't this blatant robbery?"
"Why do you say that?" Afang asked curiously, not understanding.
Wangcai turned around and patiently explained to her, "Country H has been preparing a financial supervision plan for almost a year, originally intending to improve the financial regulatory system by the end of the year."
"Simply put, the purpose of the newly appointed financial supervisors is to strengthen the management of the financial sector."
"However, the intervention of the International Monetary Fund rendered all of this futile."
It seems that the so-called international aid is nothing more than a means to facilitate the entry of more international hedge funds into Country H.
"His true intentions weren't in the wine," Chen Dong remarked.
Wangcai continued his analysis: "Judging from the current situation, the Korean won is still a negative factor, but..."
He looked at Chen Dong and reminded him, "The bottoming out and rebound is coming soon, and we must make an accurate judgment on this."
These measures, which outsiders perceive as highly detrimental to Country H, are being actively coordinated by the President, the Ministry of Finance, and the Financial Supervisory Authority of Country H.
After the three conditions were met and the Korean won began to gain a foothold in the financial market, the market did not rebound as strongly as expected, but instead went in the opposite direction.
The Korean won exchange rate fluctuated wildly, and a large amount of international financing entered H country at base cost, taking advantage of the easing conditions proposed by the International Monetary Fund.
The composite index of South Korea fell further, and the exchange rate of the South Korean won once reached 1,142 won to one US dollar.
This situation is completely contrary to the Ministry of Finance's expectations for the direction of the financial market. The people of H country have seen the increasingly deteriorating financial market and are even more pessimistic.
As the currency of Country H depreciated sharply, commercial banks, led by Seoul Bank and Jinzhou Bank, adjusted their lending rates under the instructions of the Central Bank of Country H, further increasing the cost of borrowing for the public.
The devaluation of the Korean won directly leads to currency inflation, while the direct consequence of banks raising lending rates is deflation.
In other words, while prices are rising dramatically in the market, the money in the hands of people in Country H is becoming increasingly worthless. If people want to borrow money from banks to meet their most basic living needs, they have to bear quite high borrowing costs.
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