This legend contains a number of contradictions....
Black Wednesday - September 16, 1992 - the day there was a sharp depreciation of the pound sterling . Relative to the Deutschmark price decreased from 2.77 to 2,70 GBP / DEM (-2,52%). Against the U.S. dollar price fell from 1.86 to 1,78 GBP / USD (-4,49%). In the next two weeks quotes continued to decline.
Quite often collapse associated with the actions of the American financier George Soros.
Allegedly, a few years before he planned operation, bought pounds in small batches, and then using the generated foreign exchange reserves, 15 September Soros foundation " Quantum " simultaneously sold about 5 billion pounds in exchange for 15 billion German marks at the rate of 2,82 GBP / DEM. Price rushed down the pound. Subsequent repurchase decliners pounds a day allowed George Soros to make, according to various estimates, 1-1.5 billion.
This legend contains a number of contradictions. A simple calculation shows that $ 1 billion is about 568 million pounds ( at the price after the fall of 1,76 GBP / USD have 1 billion / 1.76 = 568.18 ). To reap the benefits of the order of $ 1 billion on the back of 15 billion German marks, the price would be reduced from 2.82 to 2.548 ( 15000/2 , 548 - 15000 /2 = 82 567 820 000 pounds). But that price was not achieved until 22 September, and not the 16th, it 's a deal would have to continue for almost a week, and not one day, or in a transaction had to use much more than 5 billion pounds. But Soros himself later admitted that "With shares at seven billion, we have brought the volume of transactions up to ten billion dollars. A half times greater than the sum of all assets of the Fund ". Ten billion dollars correspond to 5 billion pounds and costs prior to the devaluation.
Careful comparison chart quotes sterling relative to the Deutschmark to schedule quotations pound against the U.S. dollar shows that the real depreciation of the pound began a week before the transactions Soros - September 9 pound began to rapidly fall in price against the dollar. The pound sterling against the U.S. dollar September 16, 1992 was significantly stronger ( almost 2-fold in percentage terms, see quotation charts ), although the legendary deal Soros did not apply to market the pound / dollar.
Just a number of reasons ( the UK 's membership in the European monetary system of fixed exchange rate corridor, recently last parliamentary elections, the decline in industrial production ) The Bank of England is keen to keep parity to the German mark. At the same time due to bias in the yield, including the placement of deposits, the German foreign exchange market has become more attractive than English. Speculators sizing a week and analyzed the action of the British government, which was taking more and more loans from Germany. Soros spoke with Helmut Schlesinger, Bundesbank president, and found that the reduction of interest rates has no plans to Germany.
When it became apparent that the government will not be able to keep the course, speculators rushed to sell pounds sterling. Soros was one of those speculators, large, but not the only. Its operations were complicated. He sold and other weak European currencies. $ 500 million Soros bought shares in British companies, because after the devaluation of the British currency they had to grow in value. Soros bought German and French bonds and selling stocks. In all these operations Soros enjoyed considerable credit.
More September 15 John Major canceled a planned trip to Spain because of the crisis. Bank of England makes a series of foreign exchange intervention. To speculators joined numerous corporations , pension funds and insurance companies.
Many hit the jackpot at the drop of a pound, but their profits have remained in the shadows. Paul Tudor Jones, Bruce Kovner, or of " Caxton Corporation " were among the top prize winners : first earned 250, the second about 300 million dollars. Leading American banks, actively operating with foreign currencies, especially the " City Corp. ", " J. JP Morgan & Co. "and" Kemikl Bank "is also satisfied. In total for the third quarter of banks earned $ 800 million in addition to foreign currency trading.
- Robert Slater , Soros : The Life , work and business secrets of the world's greatest investor.
September 16 British Finance Minister Norman Lamont raised the discount rate from 10 percent to 12 percent. After the opening of U.S. stock exchanges ( London 1330 ) started a new wave of sales. Rate increased to 15% ( the second time that day ). However, neither this nor other European foreign exchange intervention of central banks the pound sterling could not stop.
As a result of the end of September marks the pound relatively briefly stabilized at 2,50 GBP / DEM (-11%) followed by a decline in October to 2,40 GBP / DEM (-14,3%). At the same time the pound against the dollar has stabilized later - only in November with a fixed minimum at the end of December 1992. Soros did not conduct operations in this market, but the overall decline of the pound against the dollar was 25 % (from 2.01 to 1,51 GBP / USD).
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