Soros borrowed a lot of Thai baht from the United States, and then he and other fund managers began to sell a lot of Thai baht. The Thai money market immediately became turbulent and the Thai baht depreciated sharply. He can buy Thai baht at a very low exchange rate and then return to the United States to make money.

1 On March 3, 1997, the Central Bank of Thailand announced that nine domestic finance companies and1housing loan companies had problems of low asset quality and insufficient liquidity. Soros and his men thought they were pre-emptive and ordered the sale of shares in Thai banks and financial companies, and depositors withdrew a lot from all financial and securities companies in Thailand. At this time, the western impact fund headed by Soros is waiting for a large number of Southeast Asian currencies to jointly sell the Thai baht on a large scale. Under the siege of many western "heroes", the Thai baht was irresistible for a while and kept falling. In May, the lowest jumped to 1 USD against 26.70 baht.

The Central Bank of Thailand devoted all its efforts to the whole country, and launched an anti-encirclement campaign against Soros in the middle and late May, aiming at disintegrating Soros's will, making him retreat from difficulties and stopping leading the people to attack the Thai baht. Due to the sudden tightening of monetary policy and the sharp increase in interest costs, Soros's army was caught off guard and lost $300 million, which was a blow.

Soros believes that the Bank of Thailand can do nothing more than this. After hard work, the Thais did not put themselves in a desperate situation and suffered relatively little losses.

1June, 997, Soros sent troops again. He ordered the three armed forces to regroup, ordered hedge funds to start selling US Treasury bonds to raise funds, expanded Soros's army, and later launched another fierce attack on the Thai baht. In a flash, the inclusive market in Southeast Asia was filled with smoke, and the two sides started hand-to-hand combat. Thailand is in chaos and the war situation is complicated. The major exchanges are like boiling hot soup, and people are running and screaming wildly.

After a short battle, the Central Bank of Thailand, with a foreign exchange reserve of only $30 billion, announced that it had "run out of ammunition and food". Faced with the overwhelming Soros army, they could not keep the Thai baht at a fixed exchange rate. Thais have to come up with a last resort, dig up the meat to mend the sore and implement a floating exchange rate. Unexpectedly, this is what Soros expected, and he also made various preparations for it. Various countermeasures have been implemented, and the fate of the Thai baht has been set on the cross of shame by Soros. The Thai baht continued to fall. On July 24th, the Thai baht fell to 32.5: 1 against the US dollar, a record low. Soros's massacre really made the world miserable.

Extended data

Soros adopted a three-dimensional speculative strategy, not just foreign exchange operations. The so-called three-dimensional speculation refers to financial speculation by using the correlation between three or more financial instruments.

During the first half of 1997, some large funds, represented by Quantum Fund, used "leverage" to continuously squeeze the financial market in Thailand, which triggered the financial crisis in Thailand. In the subsequent evolution of the Southeast Asian financial crisis, these funds used "leverage" on a large scale, which aggravated the degree of the crisis. How did they do it?

As Soros himself described, "We use our own money to buy stocks, pay 5% in cash and borrow the remaining 95%;" If bonds are used as collateral, we can borrow more money, and we can buy long-term bonds worth at least $50,000 with 1000.

They used their own funds as collateral, borrowed money from banks to buy securities, and then used securities as collateral to continue borrowing, which quickly expanded the debt ratio. Not only that, they also widely speculate on various derivatives with "high leverage" characteristics, thus further increasing the leverage ratio.

According to The Economist, Quantum Fund did buy a large number of put options as early as1March 1997, borrowed a large amount of Thai baht in the form of swaps, and sold Thai baht futures and forwards, because it was expected that counterparties would sell Thai baht spot to hedge the value of derivative contracts, and it was easy to be devalued by others.

He Xun. How did com- Soros profit from the Asian crisis in 1997?