1 In March 1997, when the Bank of Thailand announced that nine domestic financial companies and1home improvement housing loan companies had problems of low asset quality and insufficient liquidity, Sorosin thought that this was a hint to the deeper problems that might occur in Thailand's financial system. Soros and other arbitrage fund managers began to sell a lot of Thai baht, and the Thai foreign exchange market immediately became restless. The Thai baht has been falling all the way, reaching a low of 1 USD of 26.70 baht in May.
As the first step, the Central Bank of Thailand formed an alliance with Singapore, and used about 654.38+0.2 billion US dollars to absorb Thai milling. The second step is to imitate Mahathir's strategy and tactics in 1994, and prohibit local banks from lending to Soros's army by administrative order; In the third step, the interest rate will be greatly raised, and overnight rate will be raised from about 10% to 1500%. With a three-pronged approach, new sharp weapons and a strong counterattack, Taimo rose to a new high of 2520 points on May 20th. These powerful measures made Soros's transaction cost soar, losing $300 million at once. However, Soros is full of confidence in his original theory and insists that his point of view is correct. He will not only close the original position, but even increase the position. The loss of $300 million doesn't scare Soros at all. He thinks that even if Thailand tries its best, it can't resist his impact. He is determined to win.
In late June of 1997, Soros raised more funds and launched a fierce attack on the Thai baht again. The major exchanges fell into chaos, the Qin baht plummeted, and traders sold Thai baht crazily. The Thai government used $30 billion in foreign exchange reserves and $654.38+0.5 billion in international loans to try to turn the tide. However, compared with unlimited international hot money, this mere $45 billion is just a drop in the ocean.
On July 2, because the Thai government could no longer compete with Soros, it had to change the currency linked exchange rate system that had been maintained for 65,438+03 years and implement a floating exchange rate system. The Thai baht fell even more. On July 24th, the Thai baht fell to the lowest level of $65,438+0 to 32.63 baht. The Thai government was swept away by international speculators for $4 billion.
With the US dollar as the guarantee, he lent a large amount of Thai baht from Thai banks and sold it in the foreign exchange market, forcing the Thai central bank to use foreign exchange reserves to deal with it. After a short battle, the foreign exchange reserves of the Bank of Thailand were announced, forcing it to announce the floating exchange rate of the Thai baht. The Thai baht immediately depreciated sharply in the foreign exchange market. Soros bought back the Bank of Thailand with less dollars and made a lot of money out of thin air.