George Soros attacks Taiwan currency, wants revenge

During the 1997 Asian financial crisis, hedge fund speculators crashed and brought down several Asian nation’s currencies. The Taiwanese central bank however, defeated George Soros attempt to crash the New Taiwan Dollar (NTD$) beyond the 30:1 TWD/USD barrier mark.

Learnt from his Taiwanese failure 13 yrs ago, somebody is back with heavy vengeance!

Billionaire currency speculator George Soros (left) is suspected of being responsible for the recent rate fluctuations in Taiwan Dollar

Billionaire investor George Soros’ hedge funds are targeting the Taiwan dollar for speculative trading, a Taiwan local newspaper reported.

George Soros, who set up an office in Hong Kong last month, is believed to have increased his speculative bets on the Taiwan dollar recently, and could have been the reason for the currency’s jump recently, according to sources.

“His purpose is not only to breach the NT$30 barrier, but to avenge his defeat in 1997,” sources added.

Last month, Soros’ hedge-fund firm Soros Fund Management LLC opened its first Asian office in Hong Kong. The new operation will focus on investment in A-share, China concept and RMB related products, according to an earlier report from China Knowledge.
Taiwan currency, the New Taiwan Dollar

Executives from HSBC Taiwan however, noted that recently they noticed the hot money from Hong Kong has been flowing into Taiwan, which is unusual, because the hot money was normally flow from Europe and the U.S.

Hot money inflows caused the Taiwan dollar hit a 13-year closing high against the USD at NT$32.45, it is the first time in two and a half years that the Taiwan dollar has breached the NT$30 mark against the US dollar, also known in the market as the “Perng Fai-nan last line of defense.” Perng is the governor of Taiwan’s central bank.

The Taiwanese central bank successfully resume the rates below the line of defense mark and it currently stands at NT$29.46/USD1

“The central bank is facing a hard battle, both domestically and internationally,” said the head of a foreign exchange dealing room. Internationally, the advantage that the central bank had in 1997 against Soros may be lost, now that the currency war against Asia is backed by the quantitative easing policy of the US government, the official added.

Domestically, the central government’s bid to undervalue the Taiwan dollar to protect the island’s export industries could also cause import prices to increase, such as the increase in oil prices.

Experts said that Soros had carefully studied the central bank’s attempts to intervene in the currency market and was able to successfully push up the Taiwan dollar through sudden, intense attacks last week.

After a failed attempt in 1997, Soros is likely to be better prepared this time, so the central bank would need to react cautiously, forex experts warned.

George Soros, founder of the Quantum Fund, is one of the world’s most successful hedge fund investor.

Quantum Fund became the focus of international financial community by virtue of several 90s large-scale currency attacks. With its strong financial and aggressive style speculation in the international currency markets, the fund crash perceived weak currencies, and often succeed.

In Europe, Quantum Fund broke British pound and Italian Lira. The early 90s monetary policies was to tie-linked the exchange rate within the European Community, and the pound was artificially fixed at a higher level than its value. Quantum Fund triggered the attack by large-scale shorting of the Pound for German Mark.

Although the Bank of England heavily purchased the pound (spent 27 billion in 24 hour to defend it) and thrown in measures to raise interest rates, it was defeated by Soros. The pound was forced out of the European Monetary System and adopted the free floating exchange rate. Within 1 month, as Soros speculated, the pound seen its value collapsed by 20%. The UK descended into currency crisis. George Soros earned $1 billion.

With England down, Soros turned to Italy. Before the pound attack, Quantum Fund opened huge short position on the Lira. Soros understood the aftershock effect of pound on the Lira. Soros then launched speculative devaluation attack on the Lira. The Italian Central Bank exhausted its entire reserves of $48 billion to defend the Lira, but lost to Soros. The Italian Lira collapsed 30%, saw its economy in chaos and was forced to enact large scale privatization programs. Soros made near $300 million.

Done on Europe, Soros turned to Mexico. Mexico before 1994 had a healthy-growing economy, but is built on over-reliance of short-term foreign debts. To control domestic inflation, the Mexican Peso exchange rate was pegged to the dollar and was overvalued. Soros saw weakness in this, Quantum attacked Mexico Peso. The Mexican government finished its reserves defending the peso and was to be rescued by a $50 billion loan from the USA. Mexico’s economy collapsed, leading to the Mexican economic crisis 1994. The used-to-be healthy Mexican economy failed.

Soon enough, Soros had his eyes on Asia. Like Mexico, many Asian countries such as Thailand, Malaysia and South Korea rely on short-term foreign loans to maintain the international balance of payments. Asia however, is too large a target and have far more reserves to backup their currencies. Quantum engaged in what is known as sniper hit-and-run attack on each economies to destabilize confidence, then focus heavily on Thai Baht. The Baht was the first to fall among Southeast Asia, triggering an unprecedented financial market crisis in Thailand.

Soros destroyed 4 currencies, the British Pound, Italian Lira, Mexican Peso and Thai Baht.

Crisis quickly spread to the freely convertible currency Asian regions. With Soros paving the way, fellow hedge fund investors begin joint-attack on Asian currency units. The combined speculation fund was so massive it completely overwhelmed especially the Southeast Asian nations and Korea. Monetary system and the stock market collapsed, and economies of countries like Thailand, South Korea and Indonesia were totally shaken, with second degree damages on Malaysian, Filipino, Hong Kong and Laotian economies. With their economies in shambles, the original currency value can no longer be supported. Southeast Asian currencies fell by 30-70%. This became the Asian financial crisis 1997.

In the past 31 years and a half of history, the Quantum Funds average rate of return is as high as 30%, a brilliant rate for hedge funds. George Soros now worth $14.2 billion and his Soros Fund oversees $26 billion in assets.

It’s ridiculous. Something happened similar with the AUD in the 90’s when it went onto the stock exchange.

Hedge funds play a ridiculous financial game and should be illegal.

i think it’s not hedge, its the abilities to short a financial instrument.

but for me, an advocate of free economy, free capital flow, a ban on hedge fund would be off.

a country should have its own powerful capitalists, tats what i think.

The foreign reserves of countries as of end of 2010 are:

1.People’s Republic of China People’s Republic of China - $ 2648 billion
2.Japan - $ 1118 billion
3.Russia - $ 497 billion
4.Saudi Arabia - $ 410 billion
5.Republic of China (Taiwan) - $383 billion

Taiwan has the world’s fifth largest foreign reserves. You may be thinking with that, how dare Soros attacks its currency?

Simple. the power of currency leverage, with $15 billion as margin, Soros can leverage up to $300 billion worth of currencies derivatives, that is dangerously near to the entire Taiwanese reserves.

China has $2.65 trillion reserves, which mean its currency is very hard to penetrate.

I’m pro-captalism, but the capitalism of making money by production.

What does this guy produce? Only misery. I don’t think Adam Smith envisioned this when he created the idea of capitalism. He’s rolling over in his grave. Correct me if I’m wrong.

Do I need to be an economist to have an idea about what is right and fair? Am I naive for thinking that to make money you shouldn’t have to or be allowed to make everyone around you the loser? I read Atlas Shrugged and The Fountainhead; and that vision is nothing like this.

and this, is the destructive parts of capitalism :wink:

finance has become an integral component of capitalism, i think adam smith was aware of it, a man named mayer amschel rothschild in his era (who went ahead to build the most powerful banking families in europe) had long started the currency manipulation and distortion practice.

to expand production, capital is needed, which businesses can raise by issuing shares, bonds or other derivatives. nations too, issue them to fund development. the side effects is of course, it creates a vacuum that smart people can legally take advantages of, just like soros, to make huge piles of money.

for some, soros hedge fund might be a cauldron for disaster, but to others, he is a beneficial investors. his hedge funds also invested in firms and businesses around the world, injecting in the capital they badly needed for business expansion.

Missing …

… at the expense of everyone else.



for some, soros hedge fund might be a cauldron for disaster, but to others, he is a beneficial investors. his hedge funds also invested in firms and businesses around the world, injecting in the capital they badly needed for business expansion.[/quote]

i edited to add this line :lol:

hence, it no longer become ‘at the expense of everyone else’ :lol: :lol:

smart eh him?

I think this of my news should be updated. It has been reported that the speculative money has retreated and the TWD has been stabilized for 2 months below the line of US$30

In the word, Soros appeared unable to defeat the Taiwanese central bank authorities again in his breaching attempt.