In April this year, U.S. President Joe Biden just met with the Japanese Prime Minister, and the two took photos and shook hands together, which was very intimate, and claimed that the U.S.-Japan alliance at this time was unprecedentedly strong and strong.
A few days later, with the repeated interest rate hikes of the US Federal Reserve and the impact of the war in the Middle East, the Japanese currency has seriously depreciated, and the exchange rate has even reached the extent that 1 US dollar can be exchanged for 154.6 yen.
Some experts predict that the yen may continue to plummet to 160, and if it really goes as expected, the Japanese economy will collapse completely.
The U.S. Federal Reserve's interest rate hike behavior has not only affected Japan, but also affected many Asian countries such as South Korea, many people look at this menacing interest rate hike turmoil, and feel that this is aimed at China, because the Asian region is the foundation of China's economy, so the Asian economy has collapsed, and China's economy will also face a huge crisis.
However, just when the United States was still waiting for China's economy to collapse, everyone knew that the local tyrants in the Middle East had already brought huge amounts of money to support China's economy, so China's exchange rate is basically the same as before and has not been affected.
However, many Asian countries are very afraid that this interest rate hike will become like the 1997 Asian financial crisis.
In the face of such a situation, what measures did various Asian countries take? What happened to the Asian financial crisis in 1997 that made everyone so afraid? And can the Middle East's support for the mainland really help the mainland avoid the coming of this crisis?
Asian Currency Defense
Since the beginning of this year, the US Federal Reserve has continued to raise interest rates, causing the economies of many Asian countries that rely on US investment and US bonds to decline rapidly.
Many people believe that the United States will balance the economy since the imminent rate cut, but on April 19, New York Fed President Williams publicly responded to the question of the timing of the interest rate cut.
In his speech, he said that if the expected target has not been reached, the Fed will not only not adopt a policy of cutting interest rates, but will continue to raise interest rates in order to achieve the goal, regardless of the lives of other countries.
Although everyone doesn't know what exactly this goal he is talking about, many netizens speculate that it is to bring about the collapse of the economy of Asian countries to suppress China's economy.
However, Asian countries will not be thinking about what they will achieve, because the exchange rates of various countries continue to fall.
Not only did USD/JPY reach 154.78, but USD/KRW reached 1400, which also hit a new high since October 2022.
Not only the currencies of South Korea and Japan, which have a slightly higher position in Asia, have been affected, but also the currencies of other Asian countries such as India, Vietnam, and the Philippines.
Among them, the rupiah is also considered to be the largest currency depreciation among Asian countries, falling by more than 2% on April 16, falling to a four-year low.
On the same day, Vietnam's currency, the Vietnamese dong, also depreciated to the point that 1 US dollar can be exchanged for 25,295 VND, which is also a record high.
Just one day later, the Philippine currency also fell below the key point of 57 pesos, and the Indian Ryu was also more miserable, with the exchange rate against the US dollar reaching 83.587, both reaching the highest point in recent years.
Therefore, because the US Federal Reserve has caused such a serious currency depreciation, the US Federal Reserve will not take any rescue action for the time being, so various Asian countries can only start to save themselves.
In South Korea, many people from the Ministry of Finance have issued a joint statement telling all South Koreans that the foreign exchange market continues to decline, and I hope everyone can maintain a high degree of vigilance.
Japan's Ministry of Finance, like South Korea, has verbally told everyone to be vigilant against changes in the foreign exchange market, but these two countries have not yet taken concrete measures.
However, Japan and South Korea have also said that they are also prepared to take measures to prevent excessive volatility in the currency market if their currencies continue to depreciate.
The governments of Japan and South Korea can be regarded as sitting still, and perhaps the United States has also said something to the two countries, but the government can sit still, but the Japanese business people cannot sit still, after all, the business community has suffered serious losses.
Japanese business people said that if the yen continues to depreciate, they will consider intervening in the foreign exchange market together with other Asian countries that have suffered greatly, so that the yen will no longer be worthless.
Unlike the inaction of the governments of Japan and South Korea, Indonesia has directly asked the central bank to buy its own currency to prevent currency depreciation, and plans to intervene and sell high-yield securities to support Indonesia's currency, the rupiah.
Thailand has also assigned its central bank to keep its policy rate unchanged to support the country's exchange rate against the dollar.
These different monetary policies of various countries will slow down the depreciation of their currencies to a certain extent, but if the Fed does not cut interest rates, or even continues to raise interest rates, it may be that the currencies of these countries will not be stable, and it is really possible to repeat the tragic experience of the Asian financial crisis in 1997.
The 1997 Asian financial crisis
Looking back to the 1997 financial crisis that swept through Japan, South Korea, Vietnam, Thailand and Hong Kong, many people still have lingering fears.
It is said that the financial crisis began in Thailand, at that time, Thailand was also a relatively wealthy country in Asia, and its economic resources generally relied on external debt, which led to Thailand's own currency was not much, or it can be said that there was almost none, so once the external debt changed, it would have a serious impact on the Thai economy.
Soros, who was known as the bad boy of the global financial industry at the time, aimed his hunt at Thailand, and in 1997, Soros used his quantum fund to sell a large amount of Thailand's currency, the Thai baht.
This led to a serious depreciation of the Thai currency, and the foreign debt was in vain, and Thailand invested 12 billion US dollars in order to save the situation, which barely kept the exchange rate of the Thai baht.
But apparently this is only the first step of Soros, a simple test of the water, and then, Soros began to sell a large amount of Thai baht for the second time, at this time Thailand's dollar has no reserves, and can only surrender to people like Soros who play with finance, announcing the abandonment of the fixed exchange rate system and the adoption of a floating exchange rate, which is a serious blow to Thailand's economy.
The impact on Thailand's economy will naturally affect Asian countries such as Japan and South Korea, which share the same economic fundamentals, when the exchange rate of the yen against the US dollar fell from 115 yen to 1 dollar at the end of June 1997 to 133 yen to 1 dollar at the beginning of April 1998.
South Korea's currency has also depreciated severely, South Korean companies have closed down, the chaebols have no money, only a bunch of worthless won, and South Koreans are not only facing the problem of unemployment, but also have no money to buy things, and it is difficult to survive.
In this case, both Japan and South Korea have chosen to seek help, first Japan proposed to create an "Asian Monetary Fund" to help countries affected by the crisis, but this idea was opposed by the International Monetary Fund and the US government.
South Korea also asked the International Monetary Fund for help, but it was all refused, but the South Koreans did not give up on saving themselves, and immediately launched a campaign to "give the gold to the government, we will save ourselves".
It is said that at that time, the South Korean government received a total of more than 200 tons of gold worth nearly 2 billion US dollars from the people, although this figure seems large, but it is just a drop in the bucket for a manipulator like Soros, and it will do nothing to save South Korea's economy.
In fact, this crisis also affected Hong Kong in 1998, but Hong Kong was already prepared in advance for Soros's attack at that time, and the mainland central government also gave Hong Kong $140 billion as a backing in order to help Hong Kong deal with the crisis.
Therefore, when Soros sold a large number of Hong Kong dollars, Hong Kong had the strength to buy all the orders, and also deposited the recovered Hong Kong dollars back in the bank to stabilize the exchange rate, and in the end, Hong Kong was not affected by this financial crisis, but Soros lost 800 million US dollars.
However, although Hong Kong successfully avoided the damage of the financial crisis with positive measures in 1997, if the United States has a feeling that it will not give up until it achieves its goal, many people believe that the storm of the US Federal Reserve's interest rate hike may seriously affect the mainland's economy.
In fact, this kind of worry is also understandable, after all, other Asian countries have been affected, and there is a precedent of the 1997 financial crisis, but just when everyone is still worried, these rich people in the Middle East have used a large amount of investment to stabilize the mainland economy and the hearts of the people on the mainland.
The rich people of the Middle East are coming
In recent years, as the mainland and the Middle East have become closer and closer, many large Middle Eastern capitals have also begun to invest in Chinese companies.
Just recently, the head of the Saudi Arabian National Oil Company publicly stated that China's oil market is very strong, so it is looking for opportunities to invest in China.
And this company from Saudi Arabia also on April 22, the mainland Hengli Petrochemical Company invested, according to Hengli Petrochemical's official data, Saudi companies will acquire Hengli Petrochemical has issued 10% of the share capital plus one share, also a share if according to the market value of about 11 billion yuan.
In fact, in the past two years, this Saudi company has invested in petrochemical-related enterprises in the mainland, for example, it invested in Rongsheng Petrochemical, Yulong Petrochemical and other companies in the mainland last year, and the total investment amount can reach nearly 10 billion US dollars.
In fact, not only the Saudi company is very keen to invest in the mainland, many Middle Eastern investors have invested their funds in some industries such as game social, intelligent manufacturing and logistics in the mainland, and the investment in new energy vehicle companies is also very large.
Seeing this, many Chinese people are still a little worried, although the Middle East is coming to the mainland, but with so much Middle Eastern capital investing in the mainland, isn't it possible that the mainland will be controlled by Middle Eastern capital?
In fact, no, our country and the Middle East are now in a cooperative relationship, a mutually beneficial relationship between the two, because the mainland has a lot of advanced technology, and the Middle East also wants to transform, after all, it is not the same thing to only focus on the oil industry, so there is a Middle East investment in various emerging industries on the mainland.
The Middle East originally had a relatively good relationship with the United States, and almost all of its oil was sold to the United States, and it even promised the United States that other countries would have to trade in dollars when they came to the Middle East to buy oil, but after agreeing to this condition of the United States, the Middle East also had conditions for the United States to protect the security of the Middle East.
But now that the war in the Middle East continues, it is clear that the United States has not fulfilled its promise, so the capital of the Middle East has also broken its promise and has come to China to make a large amount of investment.
Therefore, the mainland, which has integrity, market and technology, will definitely cooperate better with the capital of the Middle East, and we don't have to worry too much about the actions of the US Federal Reserve.
References:
Global Network - April 22, 2024 "Singapore Media: Middle Eastern Capital Floods into China, Not Just for Wealth"
Sina Finance - April 19, 2024 "Middle East Conflict Disrupts Currency Market, Asia Escalates Currency Defense War"
People's Daily Online - February 3, 2015 "[People] Soros retired and was once denounced as an arsonist in the Asian financial crisis"