Chapter 992 – How did this happen?

“Dad, Feng says to wait for a while. Our returns will be higher if Soros dumps in more money.” Kirilenko said.

“Are you sure? Do you know our country’s debt is more than 130 billion USD, and our foreign reserves are only 13 billion USD? Our negative assets are worth less than 30 billion USD. We are unable to defend against Soros!” Senchenko said.

Although Senchenko is with the military, in Russia, military personnel has a say in politics. He was praised by his higher-ups for passing Kirilenko’s message to them.

“That’s why we are using Feng’s strategy. Our short-term bonds and external debts are too high, and our economy might collapse anytime. The demand for crude oil, natural gas, minerals, etc. had decreased, and the prices are dropping. This year, our country’s income will drop drastically!” Kirilenko replied. “Using Feng’s strategy will let us make money from the international speculators to make up our country’s shortfall and stop inflation!”

Senchenko looks at Kirilenko and then turns to his eldest son. “What do you think?”

“Dad, I think what Brother says is right. Also, when it comes to business, he is much better than me, and he is Russian. He will not harm Russia’s interest in his benefits!”

Senchenko is glad not because his eldest son is doing well in the military, and his youngest son is Russia’s top tycoon. He is glad that both his sons are close to each other.

Since Kirilenko is announced as Russia’s wealthiest man, there is a rumor that Kirilenko becomes wealthy because Senchenko had abused his power to help him.

Of course, the higher-ups had investigated and knew this had not happened. Most of Kirilenko’s wealth comes from his businesses overseas, and he had contributed to Russia’s economic growth. For example, he had set up electronics factories, automobile factories, etc. His mining company is the only mining company in the country that does not have accidents.

This is evidence that Kirilenko is different from other Russian tycoons. The other tycoons had acquired the country’s mines and mined aggressively for profits.

The higher-ups knew the people would not think this way. Luckily, over the past few years, Kirilenko had learned from Feng Yu. He had made large donations in Russia, and it had softened the impact of these rumors.

“Since your brothers say so, I will report this to the higher-ups.”

The Russian government had spoken to a few economic experts on Feng Yu’s strategy, and everyone felt it could work. This strategy will stop the international speculators from making money from Russia and prevent severe inflation. Russia’s economy had just become better last year, and nothing must happen to it this year!

This year, Russia’s unemployment rate had increased, and GDP per capita had decreased. Many investors are preparing to dump their Russian assets, including mineral mines, and withdraw from Russia.

At this time, Kirilenko also acted. He signed contracts with a few American companies to take over their oil fields and mineral mines. But he insisted that he does not have USD and want to pay using Rubles.

The payment period will start at the end of August. Any delays, Kirilenko will have to compensate them 1% a week. If the delay is one month, the compensation will be 10%.

Kirilenko signed on the contract without hesitation, because he knows Ruble will depreciate greatly at the end of August.

These American companies thought Russia will be like those Southeast Asia countries and will have a standoff with Soros lasting a few months.

Some investors, who had reacted faster, had withdrawn their investments late last year. But after Russia implemented fiscal policies to stimulate its economy, many investors returned, and some took the opportunity to get some bargains.

Now, Russia’s stock index and Ruble’s rates are rising.

Russia had issued short-term bonds to improve its economy, and this is the sign of its economy improving. But the amount of bonds issued by Russia is over 70 billion USD!

Russia’s national debt and external debts are over 200 billion USD. After repaying the interests of their debts, Russia only has less than 40% of their annual income! How is Russia going to repay all her debts?!

Now, Soros and his men bringing large amounts of cash into the Russian market, and had stopped those bargain hunters. Russia’s stock market and Ruble’s exchange rate had risen because of them.

Many foreign funds that had left Russia returned, and Russia’s economy is improving.

Soros had invested tens of billion USD into Russia’s financial market. Part of the money is his, and some are from Quantum Fund. This amount is invested into stocks and futures, as he believes he will get high returns.

But at this moment, Russia announced a series of measures. No one had expected Russia to implement these measures!

Sovereign default!

Russia is going to default its external debts by 90 days, and their short-term bonds will be extended to three years.

This will lower Russia’s international credit ratings. Still, it will stabilize their internal problems and pass their problems to their creditors, like Germany.

Those countries’ banks had a large number of bad debts overnight, but these are not Russia’s problems.

At the same time, Russia announced they would lower Ruble’s exchange rate against USD by 50%! It will be adjusted from 1:6.2 to 1:9.5!

This means Ruble will depreciate by 50%. No one had expected this to happen.

Other countries had been trying to prevent the depreciation of their currencies. Still, Russia purposely lowered its exchange rate by 50% suddenly!

No one can react in time by these measures.

The ones, who bet Rubles will rise and had bought them, are crying now.

Especially those who used more than two times leverage will have margin call triggered. All their future contracts had become worthless papers!

Soros was pacing up and down in his office, mumbling to himself. “How did this happen? Why did things turn out this way?!”

Sovereign default

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