What kind of concept was the overnight interest rate of 1000%? This kind of extreme method had basically abolished the overnight interest rate. No one can afford to pay such high interest rates. Even drug dealers do not have such high profits!
After this policy was announced, it means the Thai Government's 5 billion USD of foreign reserves is not enough. They can't win against Soros in this game.
Of course, after this policy was announced, Soros can no longer continue to dump Thai Baht as he cannot afford to borrow anymore.
His main tactic to suppress Thai Baht will be abolished.
"Boss, is the Thai Government crazy? The consequences of their actions will affect their financial sector! "Drucken Miller panicked. Without Thai Baht dumping, how are they going to suppress Thai Baht's rates?
It's useless to rely on those foreign companies and banks to dump Thai Baht.
Soros replied calmly. "Don't be anxious. You had also said that this is a lose-lose strategy. This shows the Thai Government does not have enough foreign reserves!"
If the overnight interest rates are increased by so much, the financial institutions will be affected. Those financial institutions will have to keep a large amount of reserves to handle withdrawals, clearing transactions, etc.
Apart from overnight interest rates, there are still one day, seven days, one month, etc. The Thai Government will not dare to increase all these rates to more than 1,000%!
"But they do not have enough foreign reserves, and we do not have enough USD. Now, we can only borrow for seven days and above, and the one day interest rate is also increased to 1,000%. A week's interest is not a small amount, and our cost will increase! "Drucken Miller replied anxiously.
Soros supported his head with one hand and held a cigar in the other. He needs to think carefully about what to do next. Should he endure, or should he admit defeat and withdraw temporarily? After he raises all his funds, he will make a comeback!
"Miller, call the three of them back. We need to discuss what to do next."
Although Soros is an autocrat, he still trusts his four top managers. Important matters will be discussed with them. For example, everyone agreed to come to Asia to crack down on the currencies of many countries.
… …
"Soros is finished. They do not have any more Thai Baht to dump and will lose money." Fu Guangzheng laughed.
Feng Yu and Professor Liang looked at each other and shook their heads.
"Guangzheng, the overnight and one-day rates had increased by so much, but the seven-day rates were not adjusted. Soros and his men can borrow seven-day rates and continue to dump Thai Baht." Professor Liang explained.
"Seven days? If it's seven days, not only will their costs increase by a lot, but the risk will also increase. "
"But have you ever thought about how much money they would lose if they quit after investing so much? Furthermore, when they set up the forward foreign exchange contracts, it was 24: 1. If they cancel these contracts, they won't lose much. But if Thai Baht continues to depreciate, they will be able to make money! "Feng Yu reminded.
Soros and his men had set up at least 15 billion USD of future contracts. Even if Thai Baht returns to 25: 1, they will have 600 million USD of profits. As long as the losses from dumping Thai Baht are not more than 600 million USD, they will not suffer any losses.
But based on Feng Yu's estimation, Soros and his men had lost at least 800 million USD from dumping Thai Baht. The losses are mainly from the interest and depreciation.
That means if Thai Baht returns to 25: 1, Soros and his men will lose!
Although Soros had disrupted Thailand's economy and lost a sum of money, it will be an embarrassment to Soros.
Actually, Soros had prepared sufficient funds. Even without Feng Yu's participation, it should be enough. But Soros is too greedy. He believes a country's currency will depreciate, and there will be a chain reaction. That's why he had built up a portfolio in many East Asian countries.
Although there are leverage factors, and these are all long-term contracts, they still need to set aside a sum of margin to prevent their contracts from being liquidated if a country's currency suddenly depreciates.
Furthermore, they had built up a lot of long-term contracts, and although there are leverage factors, they had invested a lot. Soros and his men had thought Feng Yu and Feng Yu's participation will be sufficient. But they did not expect Feng Yu to withdraw suddenly!
Feng Yu is also one of the reasons why Soros is in a dilemma now.
"That means you think Soros and his men will win?" Fu Guangzheng frowned.
"No. It's the opposite. I think Soros will lose and withdraw temporarily." Feng Yu laughed and took a sip of his coffee.
"Why?"
"The main reason is that Soros does not have enough funds. They thought it will be enough with my participation. But now, I had withdrawn from the game. It's not that Soros does not have enough funds, but he will not withdraw so quickly! "
"But didn't you say the Thai Government's funds are almost depleted?" Feng Yu had said this to Fu Guangzheng a few minutes ago.
"That's right. The Thai Government does not have enough funds. Their foreign reserves had started to decrease this year, and this is a serious mistake. Think about it. If your business is in trouble and needs funds, what will you do? "Feng Yu reminded Fu Guangzheng.
"They will borrow money. You are saying they will think of ways to get loans? "Fu Guangzheng asked. If that's the case, the Thai Government will have more funds to buy Baht, and Baht's exchange rate will recover.
Thailand already owes a lot of money, and there's nothing to worry about. So, it doesn't matter if they owe more money. Those countries that had lent money to the Thai Government also do not want to see Thailand in trouble.
Once Thailand's economy collapses, they will not be able to get back the money they had lent to them! That means some countries must lend money to Thailand or help pull up Baht's exchange rate to ensure Thailand's economy and financial stability!
Professor Liang looked at Feng Yu with approval in his eyes. This student might be better than him. No … he will surely be better than him.
Economy is closely related to politics. Many people might not notice this, but Feng Yu knows this very well. Furthermore, Feng Yu is so young, and he will surely surpass him!
"Guangzheng, you still have a lot to learn." Professor Liang laughed.
"Professor Liang, I will do my best and will not disappoint you." Fu Guangzheng promised.
Feng Yu looked at Fu Guangzheng curiously and then at Professor Liang. Why does it sound like Fu Guangzheng had become Professor Liang's student? The relationship between these two was a little messy.
… …
Drucken Miller rushed into Soros's office and shouted. "Boss, we can't hold on any longer!"
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