"You mean to say that Thailand doesn't have that much foreign exchange?"
Chen Dong glanced at her with some appreciation. He had to admit that among the women he knew, Li Xiaoman's intelligence was definitely among the top three.
"But that's not right either. Thailand's BOT has said that its foreign exchange reserves are currently sufficient."
"What if the bot is faking it?" Chen Dong asked for her to say it.
Upon hearing this, Li Xiaoman looked at Chen Dong very seriously, without saying anything in rebuttal. Clearly, based on her judgment, she was very close to the truth of the matter.
However, influenced by long-term education, who would have thought that the central bank of a sovereign nation would falsify data?
In other words, it's like deceiving the whole world.
Isn't this using the country's own reputation to endorse something?
"Thank you, but I have something to attend to and need to go back to HSBC first."
"Aren't you going to finish eating and then leave?"
"No!"
Watching Li Xiaoman's graceful figure disappear into the distance, Chen Dong shook his head with amusement.
This woman always appears energetic and capable, but in reality, she often finds herself without control over her own destiny. Despite being the president of HSBC's Asia Pacific branch, Li Xiaoman is ultimately just an employee.
At best, he's a slightly higher-level employee.
After finishing lunch, Chen Dong returned to his office and loudly announced, "Continue with the original plan."
Although the Thai baht was pulled back into its normal trading range during daytime trading hours, the market generally holds a pessimistic view of the baht.
Some analysts have even bluntly pointed out that the Thai baht is not completely out of danger and is still vulnerable to attack.
In fact, the Thai baht is indeed under attack.
Although this attack was not as fierce as the last one, the Thai baht depreciated within a few days because the BOT's foreign exchange reserves were already low.
However, most investors in the market are unaware of this situation.
That afternoon.
Thailand's second-in-command has once again spoken out in support of the Thai baht, essentially stating that the baht's exchange rate against the US dollar is basically stable and within a normal range of fluctuation.
The Thai government will never allow the baht to depreciate.
Such statements, however, not only fail to clarify anything, but also exacerbate market doubts about the Thai government's ability to maintain currency stability.
Logically, the fact that Thailand's second-in-command has publicly endorsed the country demonstrates the Thai government's stance. However, in the financial market, people think differently than normal people.
Traders tend to view problems in two polarized ways.
For example, if an apple sells for 10 yuan, most people would only consider whether it's too expensive or too cheap. But a trader would think that if apple production increases, it will cause overproduction, and the price of apples will plummet. Maybe it can sell for 10 yuan now, but before long it will only sell for 1 yuan.
Similarly, this way of thinking has also been used to interpret the speech of Thailand's number two figure.
They might wonder why key figures in the Thai government would repeatedly come out to endorse something—is it because they feel guilty? Or is there really a problem with Thailand's economy?
But for offshore companies that knew the inside story, there were not so many concerns. After Chen Dong gave the order, the traders started making calls to quote prices.
"25.92, ten million baht, no problem."
"25.93, two hundred million baht, no problem."
“25.95 billion baht, okay, no problem.”
Soon, the offshore company launched another attack in the spot and futures foreign exchange markets, frantically selling Thai baht. This time, because it was during the Thai trading hours, the trading was obviously much more frenzied than the previous night's trading.
Time passed by, bit by bit.
Around 3 a.m. the following day, the Thai baht was still pressured by continuous selling, and was forced to the level of 26 baht to 1 US dollar.
During this period, there were even several offers below this price level. As the spot market declined, Thai baht forward contracts in the London and Chicago markets also fell below the BOT-stipulated level, with 26 baht to 1 US dollar.
This means that investors are not optimistic about the future of the Thai baht.
Although there are still traders operating on the BOT side, the pressure in the spot market makes their efforts to push up prices in the futures and forward foreign exchange markets meaningless.
Even if it costs money to push up the exchange rate, it will still be affected by spot arbitrage, which will bring the price back to the same level.
The only solution for the spot market is to wait until daytime trading hours, when the BOT can buy Thai baht on a large scale to drive up the baht's exchange rate against the US dollar again.
Soon, the spot market lost liquidity once again.
However, this phenomenon did not last long.
At 4 a.m., the futures and foreign exchange markets saw an increase, indicating that short-term arbitrageurs were entering the market.
Their strategy is very simple: when the Thai baht falls to its lowest point in the spot market, they open a position in the futures market at its lowest point, and then wait for daytime trading hours to lock in a portion of the profits through trading in different markets.
Because when the spot market falls to its lowest point, the futures market price also falls to its lowest point. At this point, the traders in the BOT will definitely do everything they can to stabilize the price, and at this time, their pressure is also the least.
The spot market is different. Traders will not buy or sell Thai baht at a lower price. They can naturally stabilize the futures price at this level. Even if a lower price appears, the amount will not be too large. The whole market knows that there will eventually be a BOT to intervene.
Short-term arbitrageurs exploit well-known psychological factors by quickly buying when the spot exchange rate is about to fall to its lowest point, and then waiting for the daytime trading session when the BOT intervenes and the entire exchange rate market rebounds before making their move to capture the corresponding profits.
This strategy requires extremely precise price control, because BOT's futures traders will not allow such arbitrage to siphon off their profits. They will definitely buy at the lowest point in the market as quickly as possible and then sell during the day.
The competition between the two sides is about the speed of the transaction and the judgment of the low point.
However, both can be seen as bullish forces in the market, jointly supporting the suppressed Thai baht. However, most of the positions held by BOT are based on hedging, and the funds used for arbitrage are not much.
Short-term arbitrageurs, on the other hand, need to enter and exit quickly. When the profit margin reaches a certain level, they must close their positions and leave the market, because this behavior is like dancing on a knife's edge.
Chen Dong saw all of this clearly.
The price of the Thai baht in the futures market also rose slowly, supported by both short-term arbitrageurs and BOTs. Surprisingly, it was pulled back to the level of 26.15 in a short period of time, which is much higher than the intraday low of 26.31.
Clearly, the remarks made by the Thai side have influenced many short-term investors.
......
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