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Attacker Soros lauds SAR for dollar defense
The Standard
Tuesday, June 16, 2009
Billionaire investor George Soros gives credit to the government for its defense of the Hong Kong dollar against his attacks during the Asian financial crisis more than a decade ago.
"I actually think they [Hong Kong's financial officials] did a very great job defending the dollar, so they deserved credit," Soros said in an interview with China Central Television yesterday, 11 years after he and several hedge funds mounted speculative attacks on the currency.
"This is the way how markets function ... there was absolutely nothing wrong with it, and I don't feel any sense of guilt," he said.
"This is the point people have difficulties understanding ... I do speculation in the financial markets, [but] I do so according to the rules that prevail. If it's forbidden to speculate, I won't speculate ... I am a legitimate participant in the financial markets. My action was not moral or immoral. Morality doesn't actually come into it."
Soros said if there were any problems, the regulators would take the blame. Problems stem from those who set the rules of the game, not from the players, he said.
In January 1997, Soros and other global hedge funds began dumping Thai baht in large quantities, putting the exchange rate under immense pressure. They moved to Hong Kong in 1998, dumping the Hong Kong dollar and shorting local stocks and Hang Seng Index futures, after they saw stock and property market bubbles in the SAR.
The speculation was later defeated by the Hong Kong Monetary Authority with the support of then financial secretary Donald Tsang Yam-kuen and HKMA chief executive Joseph Yam Chi-kwong.
As Soros Fund Management's former managing director Rodney Jones put it, "we used to doubt if the HKSAR government's intervention would be effective or not ... From what we see now, the HK government chose the right time to intervene."
Soros, who co-founded the Quantum Fund with Jim Rogers in 1970, told CCTV that Special Drawing Rights might be a suitable currency for a system going forward, "but we are very far from that point at the moment."
For now, Soros thinks people cannot run away from inflation. "The balance sheet of the US Federal Reserve went from US$800 billion (HK$6.24 trillion) in September 2008, to US$2 trillion by the end of the year, and they guarantee another US$7 trillion to US$8 trillion debt, so in total, it's US$10 trillion ... there will be tremendous fear that this will translate into inflation."
He said: "I sell too soon or buy too late, I make many, many mistakes ... the reason I perform better is because I constantly re-examine myself, and I try to correct my mistakes."
The Standard
Tuesday, June 16, 2009
Billionaire investor George Soros gives credit to the government for its defense of the Hong Kong dollar against his attacks during the Asian financial crisis more than a decade ago.
"I actually think they [Hong Kong's financial officials] did a very great job defending the dollar, so they deserved credit," Soros said in an interview with China Central Television yesterday, 11 years after he and several hedge funds mounted speculative attacks on the currency.
"This is the way how markets function ... there was absolutely nothing wrong with it, and I don't feel any sense of guilt," he said.
"This is the point people have difficulties understanding ... I do speculation in the financial markets, [but] I do so according to the rules that prevail. If it's forbidden to speculate, I won't speculate ... I am a legitimate participant in the financial markets. My action was not moral or immoral. Morality doesn't actually come into it."
Soros said if there were any problems, the regulators would take the blame. Problems stem from those who set the rules of the game, not from the players, he said.
In January 1997, Soros and other global hedge funds began dumping Thai baht in large quantities, putting the exchange rate under immense pressure. They moved to Hong Kong in 1998, dumping the Hong Kong dollar and shorting local stocks and Hang Seng Index futures, after they saw stock and property market bubbles in the SAR.
The speculation was later defeated by the Hong Kong Monetary Authority with the support of then financial secretary Donald Tsang Yam-kuen and HKMA chief executive Joseph Yam Chi-kwong.
As Soros Fund Management's former managing director Rodney Jones put it, "we used to doubt if the HKSAR government's intervention would be effective or not ... From what we see now, the HK government chose the right time to intervene."
Soros, who co-founded the Quantum Fund with Jim Rogers in 1970, told CCTV that Special Drawing Rights might be a suitable currency for a system going forward, "but we are very far from that point at the moment."
For now, Soros thinks people cannot run away from inflation. "The balance sheet of the US Federal Reserve went from US$800 billion (HK$6.24 trillion) in September 2008, to US$2 trillion by the end of the year, and they guarantee another US$7 trillion to US$8 trillion debt, so in total, it's US$10 trillion ... there will be tremendous fear that this will translate into inflation."
He said: "I sell too soon or buy too late, I make many, many mistakes ... the reason I perform better is because I constantly re-examine myself, and I try to correct my mistakes."