For the next period of time, Wangcai and Ma Guoliang sometimes stayed in Thailand, sometimes returned to Hong Kong, or went to other countries.
After all, financial warfare is a long-term process.
Moreover, what they saw was that Soros' Quantum Fund was only launching small-scale, probing attacks.
They borrowed Thai baht from Thai banks and then sold it off in large quantities. Their purpose in doing this was to create panic in the currency market.
The purpose of this is to create a herd effect, thereby prompting institutions and individuals holding large amounts of Thai baht to follow suit and sell off their baht, which in turn causes the baht to continue to decline in the foreign exchange market.
Meanwhile, Chen Dong, far away in Mauritius, was not only monitoring the progress of grain purchases but also keeping a close eye on the Thai baht's exchange rate to assess the progress of Soros's attack on the baht.
Although the Quantum Fund's attack on the Thai baht occurred earlier than expected, Chen Dong could imagine that their attack would still follow the same pattern.
In his previous life, Soros and his ilk operated in the same way.
One trick is all you need to succeed.
Faced with the attack from financial tycoons, the Thai government will certainly not sit idly by but will fight back.
Their methods are nothing more than using various channels to mobilize large amounts of foreign exchange reserves, using these reserves to buy Thai baht in order to maintain exchange rate stability, and raising borrowing rates to cut off the other side's supplies to a certain extent, thereby repelling various financial giants.
However, such a counterattack would be detrimental to both sides, causing significant damage to the enemy and oneself.
This is because it carries significant hidden risks. First, Thailand's foreign exchange reserves will be depleted in large quantities. Second, rising interest rates will severely damage the economy, with both the stock and bond markets suffering major blows. Furthermore, even if an attack by international financial giants is repelled, there is no guarantee that they can be defeated again when these giants return.
Once this territory falls, the consequences will be catastrophic, essentially triggering a financial tsunami in Southeast Asia.
Bangkok, Bank of Thailand.
Bank manager Wichai Sawansusi and his allies held a conference call to discuss how to join forces to counter the attack on the Thai baht by international financial giants.
"What is the current state of the banking system?" asked Lee Hong Yi of the Monetary Authority of Singapore. He was more concerned about the creditworthiness of the Thai banking system than the current short selling of the Thai baht.
Unlike most central banks, Singapore's Financial Services Authority (FSA) does not control exchange rates by raising or lowering them, but rather by controlling foreign exchange.
Because the Singapore Monetary Authority does not currently have the power to issue currency, it has no way to control the incremental portion of market liquidity. Therefore, it can only change social liquidity by altering the existing market supply.
In this sense, Singapore's regulatory authorities have stronger control over the foreign exchange market than central banks in other countries.
Li Hongyi was no longer afraid of a sell-off in the foreign exchange market, since with the support of the Singapore Monetary Authority and the Bank of Thailand, the immediate problem could be solved.
However, Li Hongyi was well aware that Thailand's current economic situation was not good. It was said that their banking system and companies were declining, and some large banks were on the verge of collapse.
Just last month, Murat downgraded the credit ratings of Thailand's three major banks—Ayutthaya, Khwangthong, and the three major Thai military banks—from A2 to A3. In his report, Murat stated that without stricter regulations, the asset quality of Thai banks would decline sharply.
If the problems in the banking system persist, even if Thailand can withstand the shocks in the currency market, the banking system will collapse as a result, leading to an outflow of hot money and a new wave of attacks.
"I have discussed this with the Prime Minister and the Minister of Finance, and we will soon have new regulations to raise the bad debt reserve for banks!" Malaga said confidently.
In fact, the central banks of Southeast Asian countries have all set their sights on the Thai baht. They know that if Thailand cannot withstand the pressure, one of them, or even all of them, will be next.
Central bank leaders around the world are well aware of the immense damage that international enthusiasm, especially speculative capital led by hedge funds, can inflict. The horrific scenes in Europe and Mexico are still fresh in their minds, but they never expected that such a scenario would unfold in Southeast Asia.
"Could you tell me about the Bank of Thailand's forward foreign exchange contract positions?" Zhao Haitao of the Hong Kong Monetary Authority asked.
"Ahem..." Although Malaga was somewhat prepared, he still looked a little embarrassed when he heard this. Fortunately, no one present saw his expression. He replied calmly, "It's roughly equivalent to the US dollars we sold, about four billion US dollars."
To cope with the current selling pressure in the spot market, Thai banks have had to buy Thai baht with foreign currency. And to prevent losses, they have had to purchase US dollar contracts in the forward market.
Meanwhile, international speculators, acting as short sellers, are shorting the Thai baht, putting it at odds with the Bank of Thailand. This puts the baht under double pressure.
As for where these forward contracts were sold, it is difficult to determine; some were sold in London, some in New York, and some in Singapore.
According to information from the Singapore Exchange, the total value of forward foreign exchange transactions in Asia reached US$5 billion during this period. Among them, the trading volume of the Thai baht grew the fastest, indicating that Thailand became a primary target for international speculative capital.
"The most urgent task is to closely monitor the entire foreign exchange market, especially forward foreign exchange transactions. If large-scale short selling occurs, we must immediately focus on the spot market. At that time, we hope everyone can lend a helping hand," Malaga said.
Although it sounded very humble, he was unwilling, but he had something to ask of him, so he had no choice but to lower his head.
Because circumstances are beyond one's control...
On the other end of the phone, most people fell silent.
After a while, Li Hongyi broke the silence: "You don't need to worry. Singapore will definitely support the Thai baht in the face of speculative capital inflows. We have 10 billion US dollars that we can inject into the market."
Why is Singapore so supportive of Thailand?
Firstly, Thailand's economy is closely related to theirs.
Secondly, most of the short-selling of the Thai baht occurred in Singapore's futures market. In this respect, Singapore is quite ethical.
Of course, Singapore also has its own considerations.
In recent years, Thailand has been striving to build a regional financial center, but it still cannot compare with established financial centers such as Singapore and Hong Kong.
Singapore hopes that this timely intervention will let everyone know that although Singapore is a small country, it is not one to be bullied.
Malaga was immediately relieved when he heard what the Singaporean officials said.
Although he had anticipated that Singapore would fight to protect him, now that Li Hongyi, the official spokesperson, had spoken out, a weight had finally been lifted from his shoulders.
......
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