A moment later.
The distress call originated from the headquarters of the Bank of Thailand and was subsequently made to Singapore, Hong Kong, the Philippines, and other locations. In accordance with the pre-arranged agreement, banks in these regions began to gradually buy Thai baht in the spot market.
At the same time, the Bank of Thailand also called major commercial banks and news media, claiming that there were no plans to expand the range of fluctuation of the Thai baht, and reiterated its statement that it would stabilize the Thai baht and prevent it from depreciating.
Meanwhile, prices in the futures market were constantly being refreshed, quickly exceeding the range set by the Bank of Thailand, causing the selling price of Thai baht in the spot market to also exceed 26 baht.
When a quote of less than 26 Thai baht to 1 US dollar appears in the spot market, the bot will immediately follow up and buy the sell order at a price of 26 Thai baht.
In truth, they didn't even need to intervene; commercial banks had already begun taking action regarding these offers. After seeing the Bank of Thailand's statement, they weren't worried about the baht depreciating. They could simply absorb these sell orders, resell them to Thai banks, and even make a profit from the price difference—why not?
Around noon.
The assistant brought out the group's working meals, and Chen Dong urged everyone to eat first. Meanwhile, in the spot market, with strong intervention from various parties, the pressure eased significantly, allowing the BOT executives to focus on another battlefield: the futures market.
When their superiors heard the real-time quote, they nearly fainted. While they were busy focusing on the spot market, unbeknownst to them, the futures market had been breached by short sellers, with prices plummeting to as low as 1 Thai baht to 1 US dollar – a 3.6% discount to the current spot market rate.
"What are you all doing? Why are prices in the futures market discounted so much?"
"If those damn international speculative funds take advantage of the trading rules, they can quickly synchronize this price."
Actually, this isn't the worst part. If arbitrage occurs in all three markets, the biggest loser will be the Bank of Thailand.
Don't underestimate this 3.6% figure. Keep in mind that the interest rate on US dollar deposits at the same time was less than half of this. If such a situation were to occur, the massive influx of funds could instantly deplete Thailand's foreign exchange reserves by hundreds of billions of dollars.
In this situation, feeling a sense of urgency, the BOT officials quickly ordered traders to push up the trading price of Thai baht futures contracts.
Traders are seasoned veterans, so how could they not understand this simple truth? But after a morning of hard work, they could only smile wryly at each other and then try their best to push up the contract price of the Thai baht in the Singapore trading market.
This process was very long and arduous, with the price rising almost one unit at a time. However, even so, by the time the Singapore market closed, the exchange rate of the Thai baht to the US dollar could only be stabilized at 26.41 to 1 US dollar.
But that's not all. Although the Singapore trading session has ended, the London and Chicago markets are still open for trading. This means they have to rush to these two markets like firefighters to maintain the Thai baht's exchange rate.
In the evening, the spot market trading hours end.
Looking back on that day, Thai banks alone sold a staggering $5 billion in US dollars. Inside the exchange, almost every trader received dozens of calls requesting to sell Thai baht.
These figures only come from major commercial banks. If it weren't for Thailand's tireless efforts to maintain the stability of the Thai baht's exchange rate, this number would probably be at least double.
Even so, in the futures market, based on the financial transactions, there are still an additional billion dollars in short sellers, according to data from the Singapore Exchange.
The real battle is yet to come, as countless short sellers will continue to flood the London and Chicago trading markets. If foreign exchange reserves are depleted by this relentless onslaught, the consequences will be unimaginable.
Outside, the sky was gradually darkening.
Inside the offshore company.
Chen Dong sat in his chair, his eyes fixed on the screen; no one knew what he was thinking.
Just then, Wangcai brought over a cup of coffee and placed it in front of Chen Dong, saying, "Boss, take a break. You've been looking at this for ages."
"Hmm!" Chen Dong nodded upon hearing this, looked up from the screen, glanced at Wangcai standing beside him, and smiled, "Aren't we going back?"
Wangcai scratched his head sheepishly. "Boss, didn't you not go back either? Besides, I wouldn't be able to sleep if I went back now. I might as well wait until London trading hours to see what's going on there first."
"Boss, do you think the outcome is already decided? I just did a careful calculation, and in just one day, Thailand's foreign exchange reserves have lost at least $5 billion, and possibly more."
"According to my previous estimate and Manager Ma's estimate, Thailand can only come up with a maximum of 40 billion US dollars in foreign exchange. I believe that the Thai baht will inevitably collapse in a few days."
"It's not as simple as you think." Chen Dong smiled and explained, "You'll see tonight. The Thai government will definitely not sit idly by. They've worked so hard to get to this point, and they're definitely not willing to go back to what they were before."
"So what do you mean?" Wangcai looked at Chen Dong, his face full of questions.
Chen Dong, however, turned his head to the side.
Early morning of the 15th.
The Bank of Thailand informed the media and major commercial banks by telephone that Thailand would do everything in its power to defend the Thai baht. In addition, it would restrict local banks from lending short-term funds to foreign investors and raise the offshore overnight lending rate to 1,000%.
In general, to profit from exchange rate differences, investors first need to borrow a certain amount of Thai baht from major commercial banks in Thailand. Then, they need to sell the baht at a certain exchange rate and exchange it for US dollars.
If the exchange rate of the Thai baht to the US dollar remains at 25 baht to 1 US dollar, then borrowing 250,000 baht from a bank would yield 10,000 US dollars.
If more people exchange their currency, the Thai baht will depreciate accordingly, with 26 baht to 1 US dollar, or even 27 or 28 baht to 1 US dollar.
Now, $10,000 can be exchanged for more Thai baht to repay the loan, and the rest becomes the investor's profit.
Of course, in reality, it is far more complicated than that.
Thailand's restrictions on local banks lending to foreign investors effectively cut off investors' access to Thai baht, while raising the offshore overnight lending rate by 1000% effectively eliminates this profit margin.
Who would borrow Thai baht for no reason if there's no profit to be made?
These two pieces of news greatly boosted market investors' confidence in the Thai baht. This was subsequently reflected in the Chicago trading session.
The Thai baht contract against the US dollar began to strengthen, gradually returning to the 4% fluctuation range set by the Bank of Thailand.
......
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