Sim's case is by no means an isolated incident.
In reality, there are countless other arbitrage funds with the same idea as him, hoping to reduce their costs by increasing their positions and then waiting for the bot to intervene.
Of course, there is never a shortage of smart people in the market. They saw this trend and chose to cut their losses and get out as soon as possible, instead of getting deeper and deeper into trouble.
26.5.
26.6.
After a brief pause, the Thai baht resumed its downward trend.
So far, it has fallen by more than 1.1%.
"Start by shorting Thai baht futures contracts with all your might. If I'm not mistaken, it's already very difficult to find long positions in the market now." Chen Dong chuckled, not in a hurry at all.
He knew that the Thai baht's fortunes were over, and from now on, it had officially entered a downward trend that no one could stop. He was just waiting for Thailand to announce the devaluation.
......
Bank of Thailand, Governor's Office.
The middle-aged man slumped on the sofa, his face ashen, and had been in this position for some time, ever since he heard Malaga reveal the truth.
Malaga had already drafted the announcement he would make first thing tomorrow morning on the table. He also needed to inform the various banks that the Thai baht would no longer be pegged to the US dollar and explain the reasons why.
While it wouldn't have been necessary to go through all this trouble and simply announce it on television, the fact that the Thai government announced it would protect the baht's exchange rate status and then immediately announced its devaluation is somewhat unreasonable. The best approach would be to explain it to them in person.
The middle-aged man kept muttering to himself, "Why did they give up so suddenly?" He really couldn't understand it. Just the day before yesterday, the number two was still giving a speech on TV, vowing to protect the Thai baht and that it would never depreciate. How long has it been?
He never expected that just one day later, he would announce the abandonment of the Thai baht exchange rate. What exactly happened?
The middle-aged man suddenly realized something, sat up abruptly from the sofa, and asked with a murderous look, "Malaga, tell me, was this your private decision? How could it be devalued so easily?"
Malaga was already in a bad mood and didn't want to talk to him at all. Seeing that he was being persistent, he said, "If you don't believe me, you can go and check the foreign exchange reserve data yourself and see if I'm lying or not."
With that, Malaga sighed deeply and said, "Now that things have come to this, I don't want to hide it from you anymore. Apart from being able to withdraw some of the dollar foreign exchange reserves from the futures market, the dollar funds in the central bank are now less than three hundred million dollars."
Although the middle-aged man was the deputy director of the BOT, his access to foreign exchange reserves was significantly increased during this period.
Apart from a very small number of people who can access the information, others have no right to view it, including middle-aged people.
Upon hearing this, the middle-aged man looked at Malaga seriously and, for the first time, gave up his ambition to become the governor of the central bank.
"Manager, the current price is close to our lowest price. Should we continue to close out the positions?" Just then, the office door was pushed open from the outside. It was the same currency advisor from before.
Malaga thought for a moment upon hearing this, and decisively ordered: "Have them control the speed of closing out positions, and make sure to support the closure of the foreign exchange market by the expiration date."
As the pace of BOT liquidation gradually slowed, futures prices began to rise slowly, which seemed to give hope to short-term arbitrageurs like Sim.
At this point, the real-time price of Thai baht futures in the foreign exchange market had fallen to 26.74 baht to 1 US dollar, a drop of 2.21%. If the leverage of 10 times is taken into account, their actual loss has reached a staggering 23.41%.
Sim was relieved; thankfully, he had added margin earlier. If he hadn't, their current positions would probably have been forcibly liquidated by the brokerage.
"Our chance is finally coming!" Sim breathed a huge sigh of relief, thinking to himself, "If the bot doesn't save the market tomorrow, I'm afraid I'll really have to jump off a building."
But what happened next left him dumbfounded.
On the trading floor, the Thai baht's rebound lasted for less than a minute before the latest market quotes showed the baht falling again against the US dollar.
Upon witnessing this scene, Sim felt a sudden darkness before his eyes and completely fainted.
...
At the same time.
New York.
When unusual volatility occurred in the futures and foreign exchange markets, traders at Quantum Fund and Tiger Fund noticed it immediately and reported the situation to higher management almost simultaneously.
"What's going on... I haven't even ordered the sale of Thai baht yet, who did this?" Almost simultaneously, Robertson, Soros, and other big names received reports from their traders, and everyone was completely bewildered by the situation.
However, this situation did not last long.
Robertson, Soros, and others all realized what was happening and issued almost identical orders.
"Thai baht was sold earlier."
soon.
An interesting scene unfolded.
After Tiger Fund and Quantum Fund issued their orders to sell the Thai baht, the news spread to other traders in the market. These traders naturally attributed the recent futures market crash to them.
Although this doesn't prove anything, forex traders still took action, following in the footsteps of the two big names, and also sold large amounts of Thai baht in the forex market.
3 a.m. on the 16th.
BOT traders are still making frequent phone calls, trying to find potential buyers for the Thai baht in the market, which would have been impossible before, as they themselves are the largest buyers of the baht.
They are now offering a price of 25.99, which is already close to the regulated level, but to their dismay, they can't find any buyers at this price.
Ultimately, there are plenty of Thai baht available at a rate of 25.99 baht to 1 US dollar. Who would be crazy enough to buy baht at such a high price? In addition, the constant unusual activity in the futures and foreign exchange markets makes these potential traders even more cautious and careful when choosing currencies.
"Lower it to 26." At this point, Malaga couldn't worry about anything else. There wasn't much time left before the futures and foreign exchange market closed, and they still had $25 billion in positions that hadn't been liquidated. Once the devaluation was announced, these funds would immediately be reduced by half, or even more.
"It dropped to the level of 26.2."
"It dropped to the level of 26.4."
"......."
After a night of desperate struggle.
4:40 AM.
BOT notified commercial banks by phone that it no longer had the capital to support the fixed exchange rate of the Thai baht. From that moment on, the Thai baht officially abandoned the fixed exchange rate system pegged to the US dollar and began to float freely in the market.
......
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