In the following two days, large peso sell orders appeared in the foreign exchange market, which made the market participants smell something different.

Most of the composition of the foreign exchange market are commercial banks, which give inquiries and inquiries in the form of telephone, and generally only quote three to four digits after the decimal point, but because the Mexican market is pegged to the US dollar, it gives no more than 4% of the fluctuation space, so the quotation should mention three to five digits after the decimal point.

For example, if a seller of dollars calls for a quote, the counterparty usually responds with a "856-880", meaning that the bid price is $0.28880 for 1 peso and the ask price is $0.28856 for 1 peso. The 0.00024 is the exchange rate difference, which is the fee charged by the bank that converts the currency.

Generally, in the foreign exchange market, the trading department of the bank relies on this frequent trading to earn the exchange rate difference, because the exchange rate difference is too small, so it needs to be operated frequently, which is the same as bond trading.

However, forex traders soon discovered that more and more sell orders were appearing in the market in the Mexican peso, while the corresponding buy orders did not increase much, so they began to quickly reduce the peso quotes and increase the spread to make more profits.

The pesos were quoted against the dollar from the lowest point of 0.28856/0.28881 all the way up to the 0.28890 mark, and the Mexican peso rushed to 3.4514 pesos per dollar.

"What's going on?" Traders asked each other about what was going on. How did the peso fall so much in such a short period of time.

Zhong Shi, who has come to the United States, looked at the new high reported on the market, and was not moved at all, and still let the bank's foreign exchange traders continue to sell.

"Mr. Zhong, the current offer is on the high side, let's wait?" Although Zhong Shi gave the order to trade, an older trader still spoke to persuade him.

His name is Garcia. Carlos, who is of Mexican and American descent, has extremely well-defined facial features and a rough appearance, but Zhong Shi has observed through these two days. He was found to be extremely shrewd in forex trading. On several occasions, it was when the peso suddenly went higher, and the timing was very accurate.

According to Garcia's estimates, there is a good chance that the Bank of Mexico will intervene in this situation. Bring the value of the peso back to its normal fluctuation range. When the time comes, you can wait for the peso to go up before redeeming it. This will allow you to exchange some more dollars.

Although the exchange rate difference has reached five decimal places, the number of pesos that Bell Stone wants to exchange is too large, as much as 27 billion pesos. This is one of the price point savings. The amount of dollar capital that can be exchanged is very substantial.

"There's no need for that!" Zhong Shi shook his head slightly, and categorically rejected Garcia's opinion, "Although the peso is weak now, I am in a hurry to exchange it, and I don't care about the difference in price. ”

After a few days of exchange, Zhong Shi has exchanged half of the pesos on hand, and the US dollar capital returned has reached as much as 4 billion US dollars. But now with less than four days to go before the Mexican government announces the devaluation, he needs to convert all the pesos he has into dollars as soon as possible.

The net outflow of $4 billion has already caught the attention of the Bank of Mexico, especially with the new government in place and the outlook for foreign exchange policy uncertain. In fact, the outflow during this period was more than 4 billion US dollars, according to the preliminary estimates of the Bank of Mexico, the outflow of US dollars was as high as about 6 billion, but after several interventions by the Bank of Mexico, some US dollar capital flowed back into the Mexican market, making these foreign exchange management authorities consider normal arbitrage transactions.

Seeing that the young man in front of him did not listen to his opinion, Garcia secretly sighed, and after shaking his head helplessly, he waved his hand and let his team continue to sell Mexican pesos.

He was a foreign exchange trader at Chase Manhattan Bank, and this time he was seconded to Tianyu Fund to help them exchange pesos, which was also Zhongshi's request, because Tianyu Fund lacked manpower in foreign exchange and could only borrow talent through this outsourcing method.

In addition to helping the Tianyu Fund exchange pesos, Garcia also has another purpose, which is to find out the true intentions of the Tianyu Fund. Although Zhong Shi hinted at Chase, HSBC and Standard Chartered that the value of the Mexican peso would change significantly recently, several banks did not really take Zhong Shi's opinion seriously after research.

They also did not expect that Zhong Shi would be "arrogant" enough to attack a country's monetary system, knowing that the total capital of the Tianyu Fund is only two billion US dollars, which is less than a fraction of Mexico's foreign exchange reserves. Therefore, after a polite exchange, they just informed their respective foreign exchange departments about the situation and became shopkeepers.

Each has its own reasons, but the core one is that as long as there are no major fluctuations in the Mexican capital market, there is no possibility of the peso depreciating. As a result of the net inflow of foreign capital into Mexico, up to 76.8% of the capital is invested in the Mexican securities market. In this case, as long as investors maintain confidence in the government and the market, there will be no large-scale capital outflows, and if there is no large-scale outflow, then the value of the peso will continue to be strong.

Although Standard Chartered is different from the other two companies, their exchange rate is not much higher, firstly, the dollar capital invested in Mexico through their channels is not much, and secondly, the cost of holding US dollars is there, and now the one-year US dollar interest rate is as high as 5.5%, if you can't lend it out in a day, you have to pay the corresponding interest, even a multinational bank like Standard Chartered must consider the cost.

Although he was very dissatisfied with the practices of these banks, Zhong Shi knew that they were also stumped by various factors, and they couldn't do whatever they wanted like themselves, but they missed such an opportunity this time, and they didn't know if they would regret it.

For this seemingly painless foreign exchange attack, others may not feel anything. But Zhong Shi has been acutely aware that the Bank of Mexico has intervened more frequently and intensively. In the past two days, the Bank of Mexico has put on the market what is said to be $1 billion in foreign exchange reserves, and together with other commercial banks, it has stabilized the value of the peso within the established range.

"They must have noticed the unusual volatility of the foreign exchange market!" Zhong Shi thought to himself, "If I exchange all the pesos at once, I don't know what they will do?" Is it next, or is it announced in advance that the peso devaluation? ”

"It's up! It's up! While Zhong Shi was still thinking nonsense, the forex traders suddenly shouted loudly. Zhong Shi shuddered, sobering up from his state of fantasy, and walked to the computer in three steps and two steps. It was found that the instant peso exchange rate became 0.28875/0.28885. It's a lot higher than the lowest price just now.

"With such a large amplitude, it must be Mexico intervening!" For this situation, traders have become commonplace in these days, but with such a large force. It's the first time I've seen it. Otherwise they wouldn't have made such a gaffe.

"We're selling early!" Garcia looked at Zhongshi, whose face remained unchanged. "If we wait a little longer, we can at least exchange tens of thousands of dollars more." "In the blink of an eye. Garcia sold tens of millions of pesos worth more.

Zhong Shi didn't hear his complaints. Is he carefully analysing the Bank of Mexico's Weishenme's big move, is it a warning to the market's sellers, or is it purely supportive? Although this is only one of many interventions, Zhongshi is keenly aware that the Bank of Mexico should be alert to the continued outflows from the market, which will pull up the value of the peso in the short term to attract the return of the dollar.

"Are they scared?" Zhong Shi secretly asked in his heart, and then without pausing for a second, he said loudly, "Sell, continue to sell, and beat the behavior of the Bank of Mexico!" ”

Garcia, who was still preparing to give Zhong Shi a few words of "earnest teaching", was suddenly dumbfounded, and opened his mouth wide and couldn't say a word for a long time.

……

At the Bank of Mexico, Otis is holding a report on a preliminary analysis of buyers and sellers in the real-time market, looking at it with his chin in his hands. The report uses the most appalling terms to say that the dollar capital is beginning to flee, and that nearly $5 billion of capital has already left the Mexican market, while less than $500 million has entered the Mexican market, which is extremely unusual and the peso is expected to fall further......

Although Otis was very unimpressed by the report, he had to admit that the situation described in the report was highly probable. After thinking for a long time, he dialed the phone in front of him: "Hello, I'm Otis, please help me connect to the president's office." ”

After a long time, there was finally an answer on the other end of the phone, and a very tired-sounding voice rang out: "Otis, I am Silva, the president's economic staff." Mr. President doesn't have time to answer your call, just tell me if you have anything, and I will tell the President as soon as possible. ”

"There is a flight of funds in the foreign exchange market, and I would like to ask the president for his opinion to see if there is a special meeting to discuss the possibility of devaluation of the peso?" Although the aide Silva did not hold any position in the government, Otis was respectful to him. You must know that when this government was not exercising power, this Mr. Silva proposed to devalue the peso, but it was rejected by officials of the previous government.

"Capital flight? Is it serious? Silva's voice was a little surprised, and Otis had to give a brief report on the situation on his side. After listening to Otis's report, Silva was visibly relieved, and after comforting Otis, he asked him to meet at the presidential palace next Monday, December 19, when all relevant officials, including the finance minister, would attend, and the relevant decisions would be made at that time.

Hearing that there would be a resolution next Monday, Otis was a little anxious, and couldn't help but raise his voice and ask: "There are still three days left, what is Mr. President busy with?" ”

"The turmoil in that province is said to have a tendency to expand, Mr. President needs to deal with this matter immediately, including the senior generals of the sea, land and air are in the presidential palace, and now the president really has no time to care about foreign exchange matters, you have a good communication with the Ministry of Finance in the past two days, and come up with a plan as soon as possible!" Silva sighed and replied somewhat helplessly. (To be continued......)

PS: Thank you very much for the monthly pass support of book friend Su Xiaosoul 3! Thank you to the book friends who have continued to support this book, the author will continue to work hard, prosperity is gratifying, bleak should also forge ahead, xiexie everyone!