The more Ma Guoliang thought about it, the more likely it seemed.
So, he couldn't help but continue along this line of thought: "A strong dollar means that currencies pegged to the dollar will also become strong. For many countries pegged to the dollar, especially export-oriented economies, this would undoubtedly be a huge disaster. Right? Because exports would become a problem, products would pile up, and the economy would suffer a severe setback. Think about which countries are in this situation!"
"Thailand?" Wangcai blurted out, a sudden inspiration striking him.
"And that's not all!" Wangcai thought for a moment and began to name them one by one, "Besides Thailand, there's Indonesia, Malaysia, Singapore, South Korea, and so on. Most of these countries have fixed exchange rate systems, and they are all strongly pegged to the US dollar."
In fact, Wangcai and Ma Guoliang both knew that most countries' currencies could only be pegged to the US dollar because their own currencies could not achieve globalization, meaning they could only exist as settlement currencies.
Therefore, the currencies of these countries can only be used for transactions within their own country or neighboring countries or regions.
This was a new situation that emerged after World War II. The United States and the United States engaged in fierce competition for the world's foreign exchange reserves. However, because the United States was too powerful, the Bretton Woods system came into being.
After listening to what Ma Guoliang said, Wangcai felt that there was some truth to it, but he also thought that what he said was too superficial and did not help him understand the relevant issues much. On the contrary, it made his thinking a little confused.
So he just rolled his eyes hard:
"You think it's really as simple as you say? Your country's currency is pegged to the US dollar, but it's not the same country's currency. Not to mention, even China, which is right next door, has its currency inversely pegged to the US dollar. How do you explain that?"
Ma Guoliang paused, clearly unable to answer.
Just now, he thought he had grasped the essence of Chen Dong's thinking, but now it seems that he is at a loss when faced with practical problems.
I have to admit, there's a significant gap between myself and my boss...
At least to the boss, the various economic data and case models seem to be of great importance, but for me, they still require careful consideration.
Ma Guoliang was well aware that at that time, the coastal areas of China were undergoing massive construction projects in order to attract foreign investment and technology.
There, water, electricity, roads, and site leveling are being implemented on a large scale. In other words, as long as there is money, a factory can start operating.
What he failed to notice was that China possessed an advantage unmatched by any place in Southeast Asia: it had the world's largest market and virtually unlimited purchasing power.
With such a huge backing, it means that even if China pegs to the US dollar, it can withstand the pressure of currency appreciation and at least weather a major storm.
The next day, Wangcai began to contact major Thai banks as Chen Dong had instructed, borrowing a total of US$20 billion worth of one-year forward Thai baht contracts, and striving to lock in the interest rate at an annualized rate of 8%.
It must be said that this is a huge loan.
The reason they haven't borrowed more is that much of their capital is invested in the Russian government bond market, and they also need a large sum of money to buy food, so they can't spare any more funds for the time being. In fact, they need a large sum of money to enter the market, and the current quota of $20 billion is sufficient.
It's important to understand that even the ever-expanding Quantum Fund, while its main fund's size has stopped increasing (currently, its main fund is only around $14 billion), has seen its excess funds invested in three funds: the Quasar International Fund, the Quantum Emerging Markets Growth Fund, and the Quota Fund.
But for Thai banks, this amount of money is not insignificant.
For this reason, the two sides went through several rounds of negotiations, and it took Wangcai more than 20 days to complete these tasks.
Originally, Wangcai expected it would only take a dozen days to complete, but he didn't expect it to drag on for so long. Later, he accidentally learned from an insider that Soros's people were also discussing borrowing forward baht contracts for several months at the Bank of Thailand.
Normally, it wouldn't be a problem if a single institution requested a large loan, but the sudden appearance of two large orders made the Thai bank somewhat uneasy.
Of course, there were only some concerns. Despite the precedent set by Mexico, Thailand believed that there were still significant differences between itself and the other side.
The key factor is Thailand's strong economic growth over the past two years.
Thailand's economy has been growing rapidly for many years, and the people have become accustomed to this growth, remaining confident about the future.
Especially since the implementation of the peg to a basket of currencies (with the US dollar accounting for 80%-82%) in 1984, the Thai baht has depreciated along with the US dollar due to the continuous depreciation of the US dollar against major currencies.
Thai manufacturing benefited greatly from this, and the rapid growth in exports strongly boosted Thailand's economic development. From 1986 to 1994, Thailand's manufacturing exports grew at an annual rate of 30%, and the share of manufacturing exports in total exports rose from 36% to 81%, while the share of manufacturing in GDP increased from 22% to 29%. Conversely, the share of agricultural exports fell from 47.7% to 13.9%, and the share of agricultural output in GDP decreased from 21% to 11%.
Without a doubt, Thailand's economic performance in recent years has been outstanding, even ranking first among the four Asian Tigers.
Reports indicate that Thailand's per capita income exceeds $2,500, and the World Bank is considering classifying it as a middle-income country.
However, when Wangcai learned that Soros's people were also borrowing more than 10 billion US dollars in forward Thai baht contracts, he couldn't help but think that his boss had once again been right, and that the Quantum Fund was very likely to target the Thai baht.
The other side did the same thing last time in the financial war in Mexico.
During this period, Wangcai made approximately $4 billion short positions against the Thai baht in the forward market.
His move drew strong opposition from his agent.
After all, Thailand's economy is currently developing rapidly and shows no signs of slowing down.
In fact, Southeast Asian countries like Thailand even benefited somewhat from the Latin American financial crisis.
Many of the products exported by these emerging countries are in competition with each other.
Currently, exports from countries like Mexico and Brazil are sluggish, and markets have been captured by countries such as Thailand, Malaysia, and Indonesia.
However, Wangcai faithfully followed Chen Dong's instructions and persisted in shorting.
Moreover, knowing that the Quantum Fund might get involved, he also started paying attention.
They wanted to find some clues in the foreign exchange and stock markets to see how much the other party had invested.
However, he found that it was somewhat futile.
The other party may not have taken any action yet, or they may be acting very cautiously, such as by operating in batches. In other words, the market is not fluctuating much in this regard.
Just like Wangcai's short selling of $4 billion, it didn't make much of a splash in this huge market.
......
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