In the United States, as soon as the foreign exchange market opened on this day, there was a huge peso sell-off, amounting to as much as 500 million US dollars, forcing the Bank of Mexico to intervene. This phenomenon immediately attracted the strong attention of the foreign exchange trading departments of various commercial banks, and they all realized that there was a leader in the market who was unabashedly suppressing the Mexican peso, with hundreds of millions of dollars in exchange every day. Naturally, they would not believe that this institution that sold heavily could collapse the Bank of Mexico, but for several days of trading, this institution only sold and did not buy in the market, which made them gradually realize that something was wrong.

Among them, there are more attentive traders, who have counted the amount of relevant amounts since the first day of Bell Stone's big selling. It doesn't matter what they found, they found that the institution has so far sold more than $5 billion worth of pesos through different channels, and at the same time, the number of pesos bought is far from reaching this amount, which means that the institution is openly shorting the pesos.

Recall the sharp increase in short pesos on the IMM market, and these savvy traders quickly understood that this was a short sale of the peso. They were surprised and excited by this discovery, the smoke of the currency crisis that swept across Europe two years ago has not yet dissipated, and now there are signs that a new currency crisis is about to break out in South America, so that foreign exchange traders who are eager to have currency crises every day suddenly feel that the opportunity to gamble has come.

It is also the inherent flaw of the fixed exchange rate that makes these traders dare to short unscrupulously because of the costs and benefits to be obtained. The ratio between the two is simply too great.

However, since there are shorts, there are longs, and there are many people in the market who are not impressed by Zhongshi's behavior of selling pesos, and they buy when the market peso exchange rate falls to a low point, and then sell when the Bank of Mexico intervenes to earn the relevant exchange rate difference.

What they don't know is that the Bank of Mexico, which they regard as their solid backing, is already discussing the depreciation of the peso. If these people who make profits by taking advantage of small exchange rate differences fall into it at this point in time, they may have to spit out all their profits, and even lose a huge amount of money.

From this point of view. These people are undoubtedly dancing on the tip of a knife. The slightest mistake will shatter your bones.

"Mr. Zhong, we only have $2 billion left in Zuihou!" When Garcia recovered from the tension of the operation, his face was full of tiredness left over from the night.

After Zhong Shi snorted noncommittally, he noticed that all the traders were looking sluggish. I couldn't help but say with some guilt: "Everyone has a good rest in the past two days." Come back this weekend and exchange all your funds. ”

A group of people was pardoned. Immediately shouted happily, not caring that Zhong Shi, the nominal employer, was still on the scene.

Only Garcia was a little worried and quietly pulled Zhongshi aside. said in a low voice: "Mr. Zhong, there are still 2 billion US dollars, if you can't exchange it in time, I'm afraid you will have a lot of dreams at night." ”

At this time, Garcia had already understood Zhongshi's idea, which was to firmly short the peso. He was both frightened and a little proud to be able to join the battle to short a country's foreign exchange system as an ordinary foreign exchange trader in a commercial bank, which surprised and excited him.

I have to say that in the bones of Wall Street traders, there is a mentality that the world will not be chaotic. What these people are most afraid of is the flatness of the market, because bland means no risk, and no risk means no gain.

On the side of Chase, Garcia has already delivered the news, but I don't know if they are also following up in the market. However, Garcia has obviously noticed from the market that the number of short liliang is increasing significantly, but he doesn't know if it's someone from Chase.

"No hurry! This part of the funds will be put in place first, and it will not be too late to operate until Monday! Zhong Shi thought about it and flatly rejected Garcia's kindness. His considerations are, first, it is difficult to find opponents in the market with such a large amount of money, and even if these traders are asked to stay up late to work, it may be in vain; Second, according to the course of history, the depreciation of the Mexican peso should be announced on Monday night, in the middle of the night on the 19th, when there is still a full day left for him to operate.

Zhong Shi did not know the specific reasons for the sudden announcement of the depreciation of the Mexican peso in the last generation, but there were no more than several reasons, namely, the decline in domestic GDP, the large current account deficit, and the acceleration of the flight of foreign capital. The situation deteriorated rapidly when the devaluation was announced late at night, and in less than two days, the Mexican government ran out of foreign exchange and had to declare the peso free-floating.

For this life, whether the Mexican government will announce it in advance, Zhongshi is not clear. In fact, even if he announced it now, Zhong Shi could make a lot of money, so he didn't worry about it at all.

Seeing that Zhong Shi was so persistent, Garcia couldn't say anything, and left the trading room in a hurry after saying goodbye to Zhong Shi, he was tired enough from the work of the past few days, and he wanted to take a good rest.

……

History moves forward according to tenacious inertia, and on Monday (19th), the Mexican government did not say anything about the fluctuations in the foreign exchange market, which made Zhong Shi breathe a sigh of relief, and it seems that the advantage of his rebirth still exists. When the market opened, he asked the traders to polish all the pesos on hand in desperation.

At the same time, at the official residence of the President of Mexico, the President finally had time to receive officials and experts from the Bank of Mexico and the Ministry of Finance, except that the President only showed up for five minutes, symbolically shook hands with the group, and threw all the reporting work to his economic staff.

The unrest in Chiapas has intensified, and the regular army has begun to lose control of the unrest, and even the president cannot fully control it, although the president has issued a mobilization order requiring the army to limit the scale of the unrest to a manageable range at all costs. Despite the strict blockade of news of the unrest, the stock market has reacted, and on this day, the Mexican stock market opened with a low number of 2327 and went all the way down, without the slightest upward momentum.

The president's economic aides were naturally very resistant to this sudden devaluation, but when they heard that foreign exchange reserves had lost $5 billion in the past few days, from $25 billion to a little more than $20 billion, they were so shocked that they could not say anything to refute it. In particular, the foreign exchange losses in these two days decreased by a net of $2 billion on the 16th alone, setting a new high for foreign exchange losses.

"Gentlemen, the news that has just come has seen a huge exchange in the foreign exchange market again, amounting to $2 billion." Otis walked in from outside the conference room and announced to the people in the room with a blank face.

Just as there was silence, a staff member from the Bank of Mexico walked in and asked Otis to answer a call from the Bank of Mexico. Five minutes later, Otis announced the news to the crowd.

While these people were still immersed in the shocking fact of exchanging $2 billion on the 16th, there was another $2 billion exchange attack in the market, knowing that this was still in the morning, and if this strength was followed, then there may be a stronger attack in the afternoon.

A month ago, the Mexican foreign exchange market was trading only about $1 billion a day.

Time is running out for them!

After a long period of silence, the president's economic staff could only accept the 15 percent depreciation proposal, and they would submit their comments and suggestions to the president at a later date for the president's decision. But they all know that it's just a formality, and eventually the president will sign the relevant documents.

After a long discussion about the future shock, these people finally decided to close the stock exchange on the 20th to give the market a buffer time, and at the same time, the central bank of the foreign exchange market did not intervene in the market, allowing the peso to float freely in this range until it reached the equilibrium price that the market believed.

In the middle of the night on 19 December 1994, the Mexican Government announced that the peso would depreciate by 15 per cent, while retaining a floating range of 4 per cent, and in fact the peso depreciated by up to 17 per cent.

As soon as the news came out, the whole market was shaken!

Although the market generally believes that the Mexican peso is too high to maintain an exchange rate of 3.46 pesos per dollar, given the booming Mexican stock market and the fact that the Bank of Mexico has foreign exchange reserves of more than $20 billion, few people would have expected the peso to depreciate voluntarily at this time. The prevailing view among market watchers is that the Mexican government will gradually liberalize the depreciation of the peso to an equilibrium price.

Not only market watchers, but also hedge funds with macro strategies did not think of this. Although hedge funds that are good at spotting market loopholes judge that the peso is overvalued, because Mexico has a large amount of US dollar capital in the domestic market, and these funds are in the form of short-term bonds, not many of them have shorted the Mexican peso, and they have lost an opportunity to open a position in advance.

However, it's not too late to short the peso!

In the stronghold of hedge funds in Central Park, the pesos were the first to react to the depreciation of the peso by borrowing pesos in the market and then waiting for an opportunity to sell them. But by this time, the main foreign exchange markets where the peso flows have been closed, and all they can borrow is a small amount of pesos.

At this time, Zhong Shi was lying leisurely on the comfortable sofa chair, watching the breaking news in CNBC, and his heart was extremely comfortable.

The course of history eventually runs according to a strong inertia, and Bell Stone's short selling did not change anything except his participation. The current devaluation is just a signal, and the subsequent panic flight of capital is the real culprit that caused the peso to plummet! (To be continued......)

PS: Thank you very much for the monthly ticket from the sheep who are not very fat!