Chapter 1351: Australia's strong counterattack

"Everyone is here, so let's start the meeting.'

'Regarding the current situation of the foreign exchange market, everyone has detailed information in their hands and has already read it. We are already at a disadvantage. The offensive firepower of Wall Street and international hot money is very strong. We are already at a disadvantage.'

'We must turn the situation around immediately, otherwise we will be overrun by these financial bandits, who will attack the Australian financial system. The entire capital market will be bloodied, and we will face the same fate as Canada.'

'If we lose, then I will have to resign, and many of you here will not escape either!'

Paul John, the Australian Minister of Finance, who was seated at the head of the table, looked at everyone in the room with a serious expression on his face as he said this.

Everyone's heart trembled, and they subconsciously sat up straight, but they did not dare to make eye contact with Paul John.

In particular, Central Bank President Jack Staff lowered his head in shame.

However, he could not avoid it, and Paul John directly called out his name: 'Jack, tell me what the Central Bank can do.'

Jack Stavros then looked up, took a deep breath to calm himself down, and said, 'Minister Paul, at present, the central bank's US dollar foreign exchange reserves only amount to 5.38 billion US dollars, which is not enough to turn the situation around for the time being. The most urgent task is to find strong allies and borrow more US dollar foreign exchange. The competition now is about hard power, to see who has the most firepower and who can last until the end.'

'The central bank is considering two options: first, further raising the interest rate on short-term lending; second, the government ordering domestic banks to prohibit lending Australian dollars to international speculators.'

Both options are practical and feasible, and the second is particularly harsh, as it would cut off more than half of the international speculators' ammunition supply channels.

Without enough Australian dollars to crash the market, as long as the Australian government can hold out until international speculators run out of Australian dollars to dump, the Australian central bank will call the shots on the Australian dollar exchange rate, and all short positions will be liquidated!

However, this can only restrict domestic banks, not the branches of foreign banks in Australia, nor financial or physical companies other than banks. Therefore, there are still loopholes, but there is no way to plug them.

Of course, although these two methods will be very effective, the harm will also be great. If the situation is allowed to drag on for too long, the domestic capital market in Australia will not be able to hold out, and it will easily become chaotic and even collapse.

Policy is only a means, and the most critical factor is still a competition of hard power!

Paul John's face eased slightly, and he was quite satisfied with Jack Staff's work.

But the key is still the US dollar foreign exchange issue!

He asked again, 'What do you all think, after these two measures are implemented, how much US dollar foreign exchange do we need to win this exchange rate battle?'

'I think we need at least 10 billion US dollars, which is the amount needed on the premise that the hot money currently on our side does not retreat.'

'10 billion US dollars is still risky, I think we need at least 15 billion US dollars.'

...

'The high short-term lending rate has already had a negative impact on the domestic economy in just over a week, and if the lending rate rises again, the adverse impact will be further highlighted.'

'So if the short-term lending rate rises again, we must win this financial war as soon as possible, we can't afford to lose!'

...

'If we borrow money, Wall Street has more influence over the World Bank and the International Monetary Fund, and it is difficult for us to borrow money from the World Bank and the International Monetary Fund. This is also why we have not borrowed any money so far.'

'I think we should borrow money from the UK. The UK government will find a way. Maybe we can borrow money from and lend money to each other across the Commonwealth. Canada has been looted of its capital, which has seriously reduced the influence and comprehensive strength of the entire Commonwealth. If Australia is also looted, New Zealand will not escape either.'

'At that time, only the UK and India will be able to play a supporting role in the entire Commonwealth. It will be difficult for the other 40-odd countries to play a role. How can they compete with the Soviet Union and the United States?'

...

As the discussion progressed, opinions gradually converged, especially on the issue of asking Britain for help, which had evolved into a threat to force Britain to help Australia.

According to their analysis, Britain, as the leader of the alliance, had the responsibility to protect its smaller members. Britain dared not refuse to protect them, otherwise, if the news got out, the member states of the Commonwealth would all turn their backs on Britain.

Of course, Australia did not need to go to such lengths unless it was absolutely necessary.

As it turned out, Australia's policy was effective.

After the meeting, the Minister of Finance, Paul John, reported the situation to the Prime Minister, Bob Lake, who then called Margaret Thatcher directly for help.

Although the UK was in the midst of a wave of strikes, the battle between the Conservative government and the trade unions had reached a critical moment.

However, in the end, the British government decided to help the Australian government. Firstly, the Bank of England and the local banks jointly lent the Australian government 6 billion US dollars in foreign exchange. Secondly, Britain took the lead in brokering a deal for Australia, asking the member states of the British Commonwealth to lend a helping hand, and it was estimated that a minimum of 4 billion US dollars would be borrowed.

The British government fully assisted in raising 10 billion US dollars. As for private capital, it was up to the Australian government to see how much they could get.

The British government does not want to get its own capital involved in such a risky business. After all, capital behaviour involves both profits and losses, unlike government-to-government lending, which is not afraid of losses and must be repaid.

If domestic capital suffers heavy losses, the only one who will suffer long-term losses is the country itself.

The speed of government-to-government actions depends entirely on the will of the upper echelons.

This time, with the help of the UK, the Australian government borrowed 10.8 billion US dollars in foreign exchange in less than two days.

During these two days, the Reserve Bank of Australia chose to temporarily stop trading, allowing the Australian dollar to fall below 0.9 against the US dollar, and the short positions gained momentum.

However, after the arrival of the 10.8 billion US dollars in foreign exchange, the Reserve Bank of Australia had 16.18 billion US dollars.

With such a strong capital base, the Reserve Bank of Australia immediately became more assertive, gearing up for a counterattack to regain the upper hand and defeat the short positions!

On February 11, the Reserve Bank of Australia held a press conference.

Australian Treasurer Paul John and Reserve Bank of Australia Governor Jack Staw were both in attendance.

At the press conference, Paul John strongly accused Wall Street capital and international hot money, led by Bridgewater Associates and Tiger Management, of maliciously attacking the Australian foreign exchange market. He also declared forcefully that Australia was not Canada, that its economy was developing well, and that shorting the Australian dollar would only be suicidal.

Afterwards, Jack Stavros announced in the spotlight that in order to severely punish short sellers, the short-term lending rate would be raised again, from 22.117% to 35.249%.

At the same time, the central bank also issued another decree strictly prohibiting domestic banks from lending Australian dollars to international speculators.

As soon as the decree was announced, the exchange rate department of the central bank, which had been ready for a long time, immediately started dumping dollars to clean up the short positions.

The shorts were stunned by the Australian central bank's attack, and the Australian dollar exchange rate quickly rebounded from 0.8921 to the 0.9 mark against the US dollar, and then broke through the 0.91 mark.

The momentum of the bulls' counterattack quickly took shape!