It has to be said that the volume of trading on the Thai baht contract on the London International Financial Futures and Options Exchange (LIFFE) and the Chicago Mercantile Exchange International Money Market (IMM) is not large, and even the two together with the underlying amount together do not match the share of the Asian market (Singapore International Financial Exchange SIMEX). This is certainly due to the fact that investors in Europe and the United States are not interested in emerging markets, but it is also because of the huge influence of SIMEX in Asian currency markets.

However, the situation is a little different now, although the number of transactions in the European and American markets is still not as good as SIMEX, but if in London and Chicago, the Thai baht is quoted at a low price, and the Singapore market has a different price, then the arbitrageurs can follow and arbitrage in the mutual market, and eventually pull the price to the same level.

More importantly, it is mainly international capital that is selling the baht in the market, that is, these people control the trend of the baht to a certain extent. Therefore, even though the Singapore market far outperforms the other two baht in terms of trading volume, the prevailing view in the market is that the real-time quotes in London and Chicago reflect the true trend of the baht.

It has mastered the spot market, and then strengthened its voice in the futures market.

Now the market wants to know at what price those international capital who have borrowed a lot of baht will defeat the BOT, and this price will appear in the futures market in Europe and the United States for the first time.

However, this day was destined to disappoint them, and the two sides only made a slight contact, and then died down. As a result of the seemingly tough statements made by the Thai government, as well as the intervention of the BOT. The short sellers were not able to further suppress the value of the baht, and could only close their positions after taking part of the profits.

Seeing that the trading volume tended to stabilize again, Zhong Shi went home. The average price of his Thai Baht forward position is 25.50 baht to 1 US dollar, which is still in a profitable situation. Moreover, he only has more than 100 million US dollars in contracts on the exchange, and the rest are over-the-counter forward counterparties for foreign exchange traders to hedge, which is basically about a year, and there is no position problem at this stage.

……

Two days later, on May 14, during the daytime trading hours on Monday, international capital officially began to violently attack the Thai baht market from the futures and spot markets.

Although the Prime Minister of Thailand came out to speak. But this kind of speech has no impact on international capital at all. In a system of free market economy. The role of government has been weakened to a negligible level. While the Thai government still plays an important role in the economic system, its influence is limited to local institutions due to Thailand's openness to foreign capital.

There is a rumor in the market, a rumor that has caused investors to panic very much. That is, the Thai government is considering expanding the scope of the baht float. It will be expanded from the current 4% to 10%.

For this trick. Several of the main countries have tried in several currency crises. Britain tried, as a result of which the pound was forced out of the European exchange rate system. France tried, although it did not force the franc to depreciate. But at that time, the entire European exchange rate system expanded the range of currency fluctuations between each other, which was equivalent to the existence of the entire exchange rate system in name only. During the Mexican financial crisis, Mexico did this, and as a result, Mexico's foreign exchange reserves were quickly depleted, and it was forced to announce a devaluation in just two days.

That is, so far, all the countries that have used this trick to resist foreign exchange shocks have declared failure, without exception.

Now at this sensitive point in time, such rumors are popping up in the market, which is undoubtedly a heavy blow to the Thai baht, which is already in jeopardy. As soon as the market opened, the value of the baht took a sharp turn, breaking through the boundaries set by the BOT in an instant, falling to the level of 26.04 baht to 1 US dollar.

Once the boundary was broken, it intensified the panic in the market, and for a time the market sold surging in, and the value of the Thai baht fell one unit after another. The bulls were surprised to find that the BOT did not intervene as they expected.

What is the Bank of Thailand doing at this time? They are struggling to cope with the pressure from the spot market. When the opening hours of banks in Bangkok arrived, there were countless phone calls from all over Shijie to sell Thai baht at the lower limit set by the BOT.

At this time, the foreign exchange market has no rationality at all, because this news is conclusive, and others cannot believe it. At this time, if you don't sell at the minimum level of 26 baht to 1 dollar, you won't be able to sell it at this price when the floating range expands.

No one thought at all about the possibility that the news was a rumor, because in recent months there has been a lot of negative news about the baht, and the successive visits of hedge fund bigwigs to Bangkok have put a lot of pressure on investors who hold the baht. This, coupled with the Thai government's ambiguous statements, has exacerbated this panic.

The Thai banking system, which is the counterparty, is naturally reluctant to sell dollars at this price, and although they have not received any news that the baht will expand the floating range, they have begun to ask the BOT for help for safety reasons.

"Is it finally here?" Zhong Shi was in the office, looking at the numbers moving on the screen, and said to himself.

When the rumors appeared in the market, Zhong Shi realized that the international tour capital had finally started to make moves, which was a signal that they were attacking the Thai baht in a big way. Sure enough, as soon as the Thai baht contract of SIMEX opened, it was under tremendous selling pressure, and the bulls had almost no way to fight back, so they could only blindly let the baht fall out of the range stipulated by the Bank of Thailand.

"Are we going to join the army of short sellers too?" Andrew wasted no time in saying. Although there are nearly 10,000 positions in SIMEX, it is clear that the people of Tianyu Fund are not satisfied.

Zhong Shi nodded, signaling that they could follow the short seller, but then added "enough is enough". At this time, due to the Thai government's repeated support for the Thai baht, coupled with the news from the United States, the managers of the entire Tianyu Fund have focused their attention on the Thai baht.

This is the keen sense of smell of the apex predator, and the average investor is simply unaware of what is going on. In the U.S., Paul Tudor Jones's fund and Robert Julian's Tiger Fund have also followed the quantum fund to build huge positions.

There has been a large number of sell-offs in the spot market, and at the same time there has been a succession of declines in the exchange rate level in the futures market, and it is no longer possible to say who affects whom, and almost everyone realizes that this is the second attack on the Thai baht by international capital after the sell-off in February.

The Bank of Thailand can no longer afford to take care of the anomalies in the futures market and can only concentrate on liliang to cope with the huge pressure from the spot market. In the trading room of the Bank of Thailand, the telephone calls are constantly ringing one after another, and there are always quotations from various banks to sell Thai baht, and the Thai bank must control the Thai baht within the prescribed range.

At the same time, calls for help were made from the headquarters of the Bank of Thailand to Singapore, Hong Kong, the Philippines and other places, and according to the agreement negotiated in advance, banks in these areas began to gradually buy Thai baht in the spot market.

At the same time, the Bank of Thailand called major commercial banks and the media, claiming that it had not expanded the range of fluctuations of the baht at all, and reiterated the statement that the baht would not depreciate. However, at this time, the price in the futures market has exceeded the range set by the Bank of Thailand, so that the selling price in the spot market has also exceeded the range of 26 baht.

When there was an offer in the spot market for less than 26 baht to 1 US dollar, BOT immediately followed up and ate him at 26 baht. In fact, they don't need to make a move, as long as there is such an offer, the commercial bank will automatically eat them, because seeing the Bank of Thailand's statement, their own trading department does not have to worry about the depreciation of the baht, and only needs to sell the baht to the Bank of Thailand.

At noon, after the pressure on the spot market was reduced a lot under the strong intervention of all parties, the BOT executives had the heart to pay attention to the intervention in the futures market, but when their executives heard the instant quotations, they almost fainted. While they were trying to hold the minimum limit of 26 baht to 1 US dollar in the spot market, the futures market was already beaten by the bears, and the lowest price even fell to 26.94 baht to 1 dollar, which is 3.61% lower than the current spot market.

Feeling the urgency, BOT officials hurriedly ordered traders to raise the trading price of the Thai baht contract, even if they stabilized the value of the currency in the spot market, and also resisted the pressure from the futures market. Because if the two are not synchronized, then futures investors will choose to expire and then sell at the spot exchange price to earn the difference, which will still form a depreciation pressure on the Thai baht.

Traders could not have known this, but after a hard morning of hard fighting, they could only smile bitterly at each other, and then worked hard to pull up the exchange rate of the Thai baht in the SIMEX market, almost unit by unit, and finally at the close of Singapore, they finally managed to pull the exchange rate of the Thai baht to the point of 26.41 to 1 US dollar. No matter how high it is, there is nothing that can be done at all. And that's not all, they have to maintain the exchange rate of the baht in the London market and the Chicago market.

In the spot market, on this day alone, the Bank of Thailand sold as much as $5 billion in dollars. Almost every trader receives dozens of calls to sell Thai baht, all from various commercial banks. Thanks to the Bank of Thailand's efforts to maintain the value of the baht, the real-time quotes between banks did not fall below their prescribed range, otherwise it would have begun to collapse like the currency futures market.

In the futures market, there were more than $1 billion in short sellers on this day according to the underlying amount, and this is still only in the SIMEX market. Traders know that there will be a significant number of short sellers coming in the London and Chicago markets.

Although the exchange rate has been temporarily maintained in the spot exchange market, as soon as the market opens tomorrow, international capital is bound to attack again, and even if BOT has more foreign exchange reserves, it will be quickly depleted. Therefore, the counterattack of the BOT will soon come. (To be continued......)