Arbitrage funds are a very important complement between different markets, and can even be said to be a key factor in maintaining the balance of markets in different regions, especially in the constantly flowing foreign exchange market.

For example, there is an exchange rate difference between the currencies of three freely convertible countries, country A exchanges the currency of country B at an exchange rate of 1:2, and country B also exchanges the currency of country C at an exchange rate of 1:2, theoretically the currency of country A should be exchanged for the currency of country C at an exchange rate of 1:4, but due to factors such as monetary policy, interest rate, inflation, etc., it is very likely that the currency of country A and country C is not circulated at a theoretical ratio of 1:4, so after weighing the exchange cost, the arbitrage funds will enter the relevant circulation field. Constant cross-arbitrage of exchange rate differentials brings the exchange rate back to an equilibrium level.

Of course, this kind of arbitrage is not universal. In the case of the oil market, the price per gallon of crude oil in the Brent crude oil market is much lower than the price of light crude oil in the United States, and theoretically there is obvious arbitrage space in these two markets. However, this kind of arbitrage is difficult to achieve, on the one hand, the pricing power of crude oil is firmly in the hands of the US exchanges (now the pricing power tends to be in the North Sea Brent crude oil market), and on the other hand, due to the additional costs of delivery, transportation, etc., it is difficult to make profits between each other.

However, in the predominantly electronic foreign exchange market, this additional cost is almost negligible, so arbitrage funds are rampant, flooding every potentially profitable space.

But this time the arbitrage funds are clearly too risky, or they are too easy to trust the IMF and BOT data. Confident that you can make a certain profit before the depreciation of the baht, you can confidently and boldly bet on the Thai baht longs.

And this did not happen in the May wave of attacks, which clearly shows that their judgment of the baht is skewed from that of hedge funds, and it is even possible that they are on opposite sides. However, arbitrage funds are very cautious, and basically operate in the form of overnight ultra-short term, just to avoid the worst.

"Weishenme, is it possible that another country will make a move?" Just when everyone was silently digesting Zhong Shi's judgment, Ma Jiarui suddenly said, "Last time, it was said that Thailand and Singapore jointly intervened in the market to stabilize the value of the Thai baht. In this case, maybe it's their funds again. ”

May and now are not far apart. What happened in the Forex market is still vivid. The researchers here still remember it vividly. When Ma Jiarui mentioned the details of the joint intervention, everyone showed a look of sudden realization, obviously they had ignored this link before.

Zhong Shi glanced at Ma Jiarui approvingly, but then poured cold water on him. "Unlikely," he said. If you pay close attention. You will find that from this month onwards. There are different magnitudes of growth in forward short contracts in markets such as the Malaysian ringgit, the Singapore dollar, and the Philippine peso, which means that international speculative capital has set its sights on these countries or regions, in the current situation of the big enemy. I am afraid that the central banks of these countries will not easily use their foreign exchange reserves to bail out other countries. ”

Currency crises have never been a one-country thing. Judging from the currency crisis that has occurred, Europe has swept almost all countries pegged to the euro except Germany, and even the free-floating Swiss franc that is not pegged to the euro needs the intervention of the central bank, not to mention the currency crisis in Mexico, Brazil, Argentina and other major markets in South America have also been affected.

And this time it seems that it is only an attack on the Thai baht, but the central banks of the entire region have long been full of vigilance about this, and they are also on guard in the open and covert, and the foreign exchange traders of those central banks are on call 24 hours a day, ready to deal with unexpected situations from the foreign exchange market.

The central banks of these countries realise that if the baht fails, they are likely to be the next target, or even if the baht does not fall, they may be the target of speculative money. In such a situation, where is the heart to help Thailand?

Now Zuihou regrets it, I'm afraid it's the Monetary Authority of Singapore. There are already different voices in Singapore about the previous sparing no effort to aid Thailand, and the voice of removing Gao Shengming is also getting louder, and Lee Yiu Lung, the son of the father of the nation, has become the biggest favorite for the next chairman of the HKMA.

As for these, Zhong Shi naturally won't say it. But judging from the current situation, the situation of the snow in front of the door has been formed.

Hearing Zhong Shi's analysis, everyone was silent again. For the current unusual phenomenon in the foreign exchange market, they have naturally discovered, but Zhong Shi said that this possibility is extremely bold, they have discussed it on weekdays, and they feel that it is unlikely, but now from Zhong Shi's mouth, I know how bold the capital market is, how big the opportunity is, this somewhat shocking truth is really too reasonable.

"Let's all go and rest, it is estimated that this time tomorrow the baht may be finished!" Seeing that everyone had been busy all night, and the transactions in markets such as Chicago and New York were also tending to be dull, Zhong Shi asked everyone to rest in advance.

Hearing Zhong Shi's words, everyone was both surprised and very excited. Two consecutive days of illiquidity were already giving them the light of day, but they didn't think it would happen anytime soon, and a group of traders dispersed with mixed feelings.

Ma Jiarui didn't leave, and waited until everyone was gone before he came to Zhong Shi's side, with obvious confusion on his face, and asked: "Zhong Sheng, according to the current situation, what do you think this currency crisis will eventually develop to?" ”

The concept of a currency crisis is completely different from the concept of a financial crisis, and what happened in Southeast Asia was commonly referred to as the Southeast Asian financial crisis, which was due to the fact that the currency crisis led to the financial crisis, which ultimately deeply harmed the economies of these countries.

Zhong Shi was a little strange, glanced at Ma Jiarui deeply, and said: "Judging from the course of the previous currency crisis, I am afraid that these countries in Southeast Asia will not be spared now. What's wrong, what do you think? ”

"Nope." Ma Jiarui shook his head, and only said slowly after a long time, "I was thinking, if this currency crisis continues to spread, it may eventually harm Hong Kong, what should we do then?" ”

As a native of Hong Kong who was born and raised in Sri Lanka, Ma Jiarui naturally has a deep affection for this land. As a macroeconomic researcher, he knows the seriousness of this currency crisis, which is not only the contradiction between the two exchange rate systems, but also involves the healthy development of the entire economic system.

If the currency crisis spreads to Hong Kong, he will encounter a contradiction between ethics and professional conduct, although this contradiction is not a big problem for financial professionals, who only have money in their eyes. But Ma Jiarui is obviously not such a person, and during this time he was even considering whether to resign, although Zhong Shi has always been kind to him.

Hearing Ma Jiarui's words, Zhong Shi fell silent, but his mind was quickly thinking about Ma Jiarui's original intention. Although he knew that even though Hong Kong suffered two large-scale shocks, the Hong Kong dollar remained strong, arguably the strongest currency during the entire Asian financial crisis, and at the same time caused the entire speculators to leave "disgraced", but this is not to be said.

Whether the Hong Kong dollar is strong or not is not only related to Hong Kong's independent monetary policy, but also related to the livelihood of millions of people, and even has a great relationship with the current thriving mainland economy.

Half a day later, Zhong Shicai said with a solemn face: "Hong Kong is our foundation and foothold, if we face an impact at that time, we can't be accomplices, but ......"

Although the latter words were not spoken, Ma Jiarui already understood what he meant. Since it is not an accomplice, then there is a high possibility of standing idly by, although it is said that there is nothing less than a hedge fund with a capital size of about 10 billion US dollars (using low leverage), but whether it can hold on to it depends on the efforts of the Hong Kong government itself.

Zhong Shi's statement swept away the doubts in his heart, and Ma Jiarui, who was in a good mood, chatted a few more words, and then left with a smile.

"Although I didn't say that I was short Hong Kong dollars, I can't let go of the opportunity to short Hong Kong dollars!" Zhong Shi looked at the direction Ma Jiarui left and muttered to himself.

……

Rodney. Jones has been annoyed lately because of the unusual volatility in the baht market, which was unexpected by the entire Quantum Fund, which has focused the entire fund's attention on the Asian market, and all the pressure is on him, an economist based in Hong Kong. At this time, it is inconvenient for him to appear in Thailand, because the country has already listed him and the consortium behind him as undesirable. And the recent public speech of Chavali has brought to a climax this somewhat distinctly divisive moral annoyance.

He decided to fight back.

"Deflationary Economics, What Keynes Had to Say About Thailand" is the title he drafted, and this analysis is about to be launched to the market, telling the whole market about the role of quantum funds in this currency crisis. In the report, Mr. Jones used extremely fiery rhetoric, calling Thailand's preference for ultra-high interest rates over currency depreciation a "sheer insanity."

While this view will anger the Thai government, it will morally take the entire quantum fund out of the equation, and even cause the entire market to reflect on the hedge fund industry's impact on the monetary system, and then discover the role of people like them in the overall economic operation system, Jones thought so naively. (To be continued......)

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