certainly!
There is an even more important reason.
Li Xiaoman's HSBC bank, as well as Standard Chartered Bank in Hong Kong, had both had in-depth cooperation with Chen Dong before.
Naturally, one wouldn't try to catch a flying knife at this time. But given that it's a well-known bank in Asia, and Thailand is also an Asian country, this is quite unusual.
Traders could only inquire with banks in Europe and the United States, but after several attempts, they realized that the traders in these Western countries and regions were not fools.
After seeing that the offshore companies were selling at any cost, and wouldn't even haggle over prices under 26 baht, they quickly realized after a few times that this was a clearance sale. At this point, taking over would be like taking a knife.
Time passed slowly, but Chen Dong showed no signs of stopping, which forced the Thai baht to keep hitting new lows against the US dollar.
Those banks that originally only intended to pass through the waters saw this trend, especially when the Thai baht fell to 26 baht to 1 US dollar, and the liquidity of the entire Thai baht foreign exchange market disappeared.
Yes, it's disappearance, not lack; there wasn't even a single transaction.
It's somewhat similar to the daily limit up or down in the stock market, but that description might not be very specific. To be precise, it's what's known as a zombie stock. No one pays attention to it, and there's no buying or selling. Once trading stops, there's no more trading, and the price movement on the intraday chart shows a straight line.
Of course, this is an extreme case and rarely occurs in the stock market. It's even less likely to happen in the foreign exchange market.
However, the Thai government has set a limit of 26 baht to 1 US dollar for the Thai baht to the US dollar.
In other words, if the exchange rate falls below this level, Thailand will use US dollars to buy Thai baht in order to increase the ratio; in layman's terms, it will act as a safety net.
Because of this causal relationship, foreign banks and commercial banks in other regions dare to buy Thai baht as long as the price is above this level.
Because no matter what, the Thai baht will cover the losses, so this deal is a win-win situation.
However, the current situation is that the exchange rate of Thai baht to US dollar is very close to 26 baht to 1 US dollar. If you buy in now, there will be no profit to be made.
So here's the question: would you do something so thankless and exhausting? First of all, these commercial banks are profit-driven institutions; they would absolutely not do anything without profit to be made.
This is the fundamental reason why the market suddenly lost liquidity.
Soon, as spot market prices fell, futures market prices also began to approach the minimum threshold set by Thailand. This was a chain reaction; if the currencies in the two markets were not valued equally, arbitrageurs would intervene to bring the price difference between the two markets back to the same level.
The Thai baht has returned to its previous level, during the period when international speculative capital was attacking it. It's time to start defending the baht's exchange rate.
"Boss, there's no liquidity left in the market."
"It lost liquidity so quickly?" Chen Dong frowned, but he knew there was nothing he could do about it. The main trading market was actually in Thailand, and at this point in time, Thailand was in a state of rest. In other trading markets, the Thai baht was not a major international currency, so the trading volume was inherently small.
When there's profit to be made, they might take on some projects, but now that there's no profit to be made, they've naturally fallen out of favor.
“Yes!” Wangcai nodded and continued, “We currently have 120 billion baht in our positions. At the current rate, it may take several days to process them all.”
"Let them rest first, then we'll go all out to sell tomorrow." Chen Dong rubbed his forehead; he was a little annoyed too.
Initially, his concern was that he had to follow Soros without being noticed. However, because he was building a large position, and because he wanted to move from the back to the front, he had to sell the Thai baht and convert it into US dollars before Thailand's foreign exchange reserves were depleted.
Only by converting all the money into US dollars, waiting for the Thai baht to depreciate, and then buying back Thai baht, can you realize the real profit after deducting the money returned to the bank.
...
The next day.
Inside the bot transaction.
"Another attack is coming." This was the first reaction of the traders at BOT when they saw the Thai baht to US dollar exchange rate fall back to the critical point.
Overnight, the price dropped significantly from 25.845 to 25.999. It's now just 0.001 points away from the threshold set by the Bank of Thailand.
All of this is undoubtedly influenced by the resignation of the Thai Finance Minister. Although only two weeks have passed since the Bank of Thailand successfully defended the Thai baht exchange rate, the pessimistic sentiment in the market has not dissipated.
And now, it seems that the trend is getting worse.
"Here's yesterday's data, take a look!" A staff member in charge of recording handed over a report.
The report shows the data on BOT traders' intervention in the financial markets last night. However, they intervened in the futures exchange rate market, and even with millions of dollars, they only managed to raise the Thai baht's exchange rate by a dozen basis points.
However, this increase was far from significant, and the price quickly fell back down because the large-scale selling in the foreign exchange market directly affected the price in the futures exchange rate market.
"How is the spot market doing?" Just as many traders finished reviewing the data and were searching for the reasons, a trading manager interrupted their thoughts.
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