Chapter 1349: Reserve Bank of Australia

'Immediately put $3 billion into the market to stabilise the exchange rate!'

'Then issue a public announcement to boost market confidence.'

Jack Stav, who was no weaker than Eric Archie in ability and was able to serve as the Governor of the Reserve Bank of Australia, immediately gave orders.

Eric Arci was immediately reinvigorated and had someone execute the order.

With the RBA's huge $3 billion foreign exchange reserves quickly entering the market, the Australian dollar exchange rate stopped falling, and even showed signs of a recovery after the shock.

The bulls immediately supported the RBA upon seeing this.

'President, the situation doesn't look good. We don't have enough foreign exchange reserves, and we should think of a solution as soon as possible,'

Eric Arci said worriedly.

The RBA's latest US dollar foreign exchange reserves had decreased compared to before, to 6.71 billion US dollars.

If they suddenly put $3 billion into the market, then only $3.71 billion would be left in foreign exchange reserves.

Judging from the intensity of the battle that broke out in the Canadian foreign exchange market last year, with such a small amount of foreign exchange reserves, it would be difficult to stop the short sellers' attack, not to mention that the short sellers this time have been strengthened after the battle in the Canadian foreign exchange market!

'I know, let's discuss countermeasures at the meeting later. For now, it's enough to just hold the market,'

Jack Staff said with a stern face and a very serious gaze.

Soon, the two hurriedly left the Exchange Rate Department and arrived at the meeting room.

When they arrived, the senior management of the headquarters had already arrived, except for those who had asked for leave to travel.

Jack Staff sat down in the main seat and immediately said with a serious expression, 'Just now, the short sellers led by Bridgewater Associates and Tiger Management were selling the Australian dollar in droves, trying to repeat the disaster in the Canadian financial market last year.'

'This is the biggest crisis the Australian dollar has faced since it was floated in December 1983, and the outcome of this test will determine the safety of our country's financial markets.'

'I have just returned from the exchange rate department, and I have just directly approved the injection of 3 billion US dollars of foreign exchange reserves into the market to stabilise the Australian dollar exchange rate.'

'I have called you here to pool our collective wisdom and discuss countermeasures together to repel these financial bandits!'

As soon as he finished speaking, the senior executives present immediately started discussing the matter.

One person suggested, 'President, with our current US dollar foreign exchange reserves, it will definitely be difficult to hold out until the end. I suggest immediately selling the British pound, Japanese yen and other foreign currencies and converting them into US dollars!'

'I agree. If all of these foreign currencies are converted, we should be able to raise more than 4 billion US dollars!'

'I agree as well.'

Jack Staff did not express his opinion, but he quickly jotted it down with his pen, clearly indicating that he agreed with this opinion.

One executive commented: 'I don't recommend that the funds enter the market immediately. We should let the exchange rate fall back to around 0.90, and then enter the market with large sums of money. This will save our capital costs and give us more room for manoeuvre.'

The only response to this executive was Jack Stafford's cold stare. He had just ordered the investment of 3 billion US dollars to enter the market and buy Australian dollars. Did this executive not have ears or a brain?

'I oppose it. The short sellers are definitely attacking tentatively at first. They are probing our attitude. If we show any weakness, it will be infinitely magnified. Then we will be in even greater trouble.'

'I think we must fight back firmly to stabilise market sentiment and investor psychology.'

...

Others also expressed their opinions, and on this issue, those who believed in a firm response were in the majority.

Jack Staff didn't want to waste time here, so he simply slammed his hand on the table and said, 'Okay, skip this issue. We must respond firmly. Our weakness will bring huge risks, and this risk cannot be taken!'

'Next suggestion!'

Jack Staff slammed his hand on the table, and the executives who had previously raised such opinions all fell silent and racked their brains for other solutions.

At this time, Eric Alchi, the director of the exchange rate division, suggested: 'President, I suggest raising short-term interest rates to increase the cost of institutional borrowing. Using policy measures to show our attitude will scare the short sellers and cut off some of their sources of funding.'

'The current loan interest rate is 14.745%, and I suggest raising it to above 20%.'

Compared to raising foreign exchange reserves in US dollars, this policy of adjusting interest rates is a bit like a desperate measure, although it can only have an effect on some institutions.

But at this time, it can weaken the short positions in the future and deter some short positions, so it can be considered a success.

Another more radical executive expressed his support: 'I suggest raising it to above 30%, being more ruthless and making our attitude clearer.'

But someone immediately stood up to object: 'I object. Such a high interest rate will have a huge negative impact on the domestic economy. The bad debt problems of banks and enterprises will be exposed. This side effect is too great.'

'Once we fail to resolve this crisis in a short period of time, then our domestic financial market will erupt in crisis. The internal and external crises will erupt together, and the problem will be too great!'

'By that time, we will have to lower the loan interest rate. Once it is lowered, it will be admitting defeat to the short sellers, and international hot money will lose its last respect.'

'I support raising the short-term lending rate, but not too much. Raising it to between 20% and 23% is enough. We shouldn't go above 23% unless we have no other choice!'

...

Everyone spoke their mind on this countermeasure, arguing with one another. While trying to convince the others, they were also constantly being convinced themselves.

In the end, they agreed that the interest rate lever could be used, but the short-term lending rate would be raised by one-third, from 14.745% to 22.117%.

At the same time, the attitude of continuing to raise interest rates in the future was retained, and whether to use it would depend on the situation.

After discussing two appropriate measures, the group immediately discussed the next measure.

The previous two measures were to raise foreign exchange in US dollars to strengthen oneself, and to raise the interest rate on short-term loans to weaken the enemy.

But the key to getting through this crisis is still having sufficient self-confidence.

What can give self-confidence is naturally a sufficiently full wallet!

'I suggest borrowing money immediately from other countries and the World Bank, especially the UK and New Zealand. The UK is our sovereign state, and if our financial markets are breached, it will have a huge impact on the British pound system, and the value of a large amount of British capital invested in Australia will depreciate.'

'New Zealand has a high degree of integration with our financial markets, and once we are in trouble, New Zealand will definitely be affected. For this reason, we should ask the government to persuade New Zealand to intervene in the Australian dollar spot market together to stabilise the Australian dollar exchange rate.'

'I also agree that we need to borrow at least more than 15 billion US dollars, otherwise it will be difficult to defend against the attack of the short sellers. Moreover, the speed must be absolutely fast, and the publicity must be done properly to make the short sellers back off.'