In the harvest season, look back at how Soros made a profit by shorting the Thai baht in 1997.

At that time, Thailand accumulated a large number of risks and hidden dangers from its economic structure, asset status, financial market situation, monetary policy, to the external environment.

A financial crisis broke out in Mexico in 1994, and in 1995 the Thai economy also showed signs of crisis.

The predators smelled the smell of blood and became restless.

Soros’s hedge funds conduct extensive collection, observation, and analysis of Thailand’s economic and financial conditions.

Secret preparations for the Thai baht short campaign.

How to make money from short selling?

Going long is relatively simple, buy low and sell high. Buy it for 25 yuan, hold it, sell it for 50 yuan, and make a net profit of 25 yuan.

Short selling, to put it simply, take a cup as an example.

It is 50 yuan now. You think it is not worth the price and the price will drop in the future.

But you don’t Xiao Ming has a cup, so you borrow one from Xiao Ming and agree to return it to him in 3 months, plus a bar of coffee as interest.

I got the cup and sold it at the current price. Before the 3 months expired, the cup dropped to 25 yuan.

I spent another 25 yuan to buy the cup back, and another 2 yuan to buy it back. I ordered a cup of coffee and gave it back to Xiao Ming.

In this way, you earn 50-25-2=23 yuan.

The same is true for shorting the Thai baht.

Borrow Thai baht,

Sell Thai baht,

Convert it to US dollars,

After the Thai baht depreciates, exchange part of the US dollars into Thai baht , repay the borrowed baht, plus interest.

The rest is revenue.

It’s just that the international speculators headed by Soros are not waiting for the Thai baht to depreciate.

Instead, they are fanning the flames and adding fuel to the flames to achieve their goals quickly and violently and profit from it.

Launching an attack

After World War II, Thailand implemented a fixed exchange rate system.

The Thai baht has been pegged to gold, a major currency and a basket of currencies.

After November 1984, the Thai baht was pegged to a basket of currencies.

The Exchange Rate Stabilization Fund (EEF) announced the Thai baht exchange rate against the US dollar every day and stabilized the exchange rate accordingly. .

USD/THB was steady at 1:25.

In February 1997, Soros led his Quantum Fund.

First borrowed Thai baht from various banks in Thailand.

After accumulating a certain amount, he sold a large amount. Convert to US dollars.

At the same time, the media was used to spread rumors about the devaluation of the Thai baht, attracting more speculators to follow up.

Due to large-scale selling of speculative capital, the Thai baht exchange rate fell, causing panic in the market and following the trend of selling, accelerating the decline of the Thai baht exchange rate.

On February 14, it fell to the lowest point in 10 years , 1 US dollar to 26.18 baht.

The Thai government resolutely fought back,

using US dollar foreign exchange reserves to purchase Thai baht,

raising short-term interest rates and raising the cost of speculative capital to obtain local currency,

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The exchange rate was temporarily stabilized, but it also consumed a lot of foreign exchange reserves.

Raising interest rates has also had a negative impact on the domestic economy.

In this attack, Soros failed and lost a small amount of funds.

Attack again

After regrouping, Soros and other international speculative capital were more fully prepared for this attack.

An all-round and three-dimensional layout was made before the attack. .

Use multiple financial tools and increase media influence to spread the news.

The forward foreign exchange market sells Thai Baht forward contracts.

Shorting stocks in the stock market.

Stock index futures increased short positions.

This series of moves also attracted a large number of investors to follow suit, accumulating strong short-selling potential.

In May 1997, a new round of attacks began.

Bears are once again selling the baht heavily in the spot market.

The Bank of Thailand, the Monetary Authority of Singapore, and the Hong Kong Monetary Authority collaborated to intervene.

In the end, the hedge fund suffered a loss of US$300 million.

The situation was temporarily under control .

After the market briefly stabilized,

In June, taking advantage of the unstable political situation in Thailand, financial giants launched another fierce attack,

and stepped up their media offensive to attack The newly promulgated market supervision policy has spread rumors that the Finance Minister is about to step down.

Later, under pressure from public opinion, Finance Minister Weerawang resigned.

People are even more panicked, and Thai companies and people have also joined the team to exchange for US dollars. The exchange rate of the Thai baht against the US dollar has plummeted.

The Bank of Thailand is struggling to support it, but to no avail.

At the end of June, Thailand’s foreign exchange reserves dropped by US$30 billion, leaving only US$2.8 billion, and it no longer has the ability to continue to intervene in the foreign exchange market.

In the end, it failed to withstand the fierce offensive of short sellers.

On July 2, Thailand announced that it would abandon its fixed exchange rate and implement a floating exchange rate, causing the Thai baht to plummet.

The Thai baht fell 17% against the US dollar that day.

The Asian financial crisis has officially begun.

The Thai baht fell to 56:1 in 1998 from 25:1 to the US dollar.

If the initial Thai baht against the US dollar is 25:1, it will be calculated as 50:1 after depreciation.

Suppose that 200 billion baht is borrowed from the bank and converted into 8 billion US dollars. When it falls to 50:1, all we need to do is convert US$4 billion into 200 billion baht and return it to the bank, plus some interest.

The surplus was nearly $4 billion.

A heavy blow

The financial crisis has had a serious impact on Thai society.

Dozens of banks closed down, a large number of companies went bankrupt, 2.7 million people lost their jobs, the stock market collapsed, the property market fell, and society was in chaos.

The fruits of labor accumulated by the Thai people’s hard work have been frantically looted.

The economy that has been built and developed for decades has been destroyed so easily.

The international capital tycoons represented by Soros are satisfied with their profits, move to other markets, and continue to loot the next city.

(Public ID: moduov)