Nomura Securities Headquarters, Nihonbashi, Chuo Ward, Tokyo.
Although the atmosphere had been calm in the morning, once hedge funds launched their attack on the rupiah and the Indonesian stock market began to waver, tension swept through the derivatives division.
"IDX has dropped below 600 again!"
At the panicked shout from a subordinate, Division Head Nakamura checked the monitor displaying the Indonesian stock index chart, his face tightening as he let out a low groan.
[IDX: 599.70 (-17.57)]
The market had been rebounding due to bargain buying, but it suddenly took a nosedive as hedge funds began selling off the rupiah, leaving them visibly flustered.
Just then, Section Chief Okamura spoke in a grim, urgent voice.
"The rupiah has crashed from 2.64 to 3.11 against the dollar — that's a 17.8% drop!"
"What! It shot past 3 rupiah just like that?"
Raising his eyebrows, Nakamura questioned sharply. Okamura, clearly overwhelmed by the sudden change, answered with uncertainty.
"Yes. The Indonesian central bank is trying to intervene urgently, but it's struggling to stem the rupiah's collapse."
"This is insane."
As Nakamura frowned deeply, Executive Director Usami — wearing a gray suit and looking visibly agitated — burst into the office and shouted.
"What the hell is going on here?!"
"Executive Director! You're here."
Nakamura rushed forward and bowed his head respectfully.
"I heard the Indonesian stock market is crashing again!"
Caught off guard by Usami's sudden appearance, Nakamura scrambled to come up with an explanation, his voice sounding strained.
"That's right. It's dropped below 600 points."
At the news, Usami's face contorted in frustration.
"Why did the atmosphere shift so suddenly?"
"Well…"
Nakamura didn't know the exact reason either, but he couldn't say he didn't know. So, he opened his mouth and began speaking with the best guess he could muster.
"With the rupiah crashing due to speculative attacks, foreign investors seem to be pulling their funds out of the Indonesian market in a hurry."
"What's the exchange rate now?"
Okamura quickly checked the monitor and answered in Nakamura's stead.
"It's at 3.11—no, 3.13 rupiah to the dollar."
"What?!"
Usami's eyes widened in disbelief.
"It hadn't even broken 3 the last time I checked — and now it's dropped that far already?!"
"The rupiah sell-off is so intense that even though the Indonesian central bank is intervening with foreign reserves, the decline isn't stopping."
At Okamura's explanation, Usami furrowed his brow.
"Is the speculative attack really that aggressive?"
Nakamura quickly jumped in to add to the explanation.
"There's certainly pressure from speculative attacks, but it looks like foreign investors who had entered Indonesia are now rushing to convert their withdrawn stock market funds into dollars, fearing losses from the currency depreciation. That's accelerating the rupiah's plunge."
"Damn it!"
A curse slipped out of Executive Director Usami's mouth without him even realizing.
It was no wonder. With the rupiah falling, foreign investors were pulling their money out of the Indonesian market, causing the stock index to crash. Then, converting those funds into dollars only further weakened the rupiah — a vicious cycle creating a classic death spiral.
Facing this worst-case scenario, Usami clenched his lips tightly and stared straight at Nakamura.
"You're not telling me the index will drop below 450, are you?"
Nakamura, unable to meet his eyes, responded in a hesitant voice.
"If the rupiah keeps falling like this… we can't completely rule out the possibility."
"Damn it all!"
Usami shouted, almost in a fit.
"No! That cannot happen under any circumstances!"
His eyes sharpened into slits as he raised his voice, fury directed squarely at Nakamura.
"Do whatever it takes to keep it above 450!"
Nakamura could only look troubled, knowing full well the limits of what they could do.
"I want to, believe me. But we don't have any real way to stop it."
"So what, we're just going to stand around with our hands in our pockets?! If that second option gets triggered again, we'll owe the Eldorado Fund another billion dollars!"
Nakamura remained silent, bowing his head under the weight of the crisis.
Usami's fury grew at the lack of answers, and he practically exploded with frustration.
"Then support the rupiah alongside the Indonesian central bank, or start buying up top market cap stocks to keep the index afloat — do something!"
"That's not something we can do directly. And if we interfere the wrong way, we could end up deepening the losses," Nakamura responded, shaking his head with visible concern.
Usami knew his order was reckless, but he couldn't just sit back and do nothing.
"Get Katsunaga, the head of trading, to my office now! Actually—never mind, I'll go myself!"
With that, he stormed off in heavy, furious steps.
Watching the whole exchange in tense silence, Section Chief Okamura finally sidled up and whispered,
"He really does mean to prop up the Indonesian stock market by any means necessary."
"We'll see…" Nakamura muttered, eyes still locked on the screen.
"I'm not so sure…"
Could it really be stopped?
Nakamura's face darkened as he stared off in the direction Usami had stormed away.
***
Two days later.
Despite desperate defense efforts by the Indonesian government and central bank, the rupiah continued its freefall, plunging to 3.24 per dollar.
Meanwhile, the Indonesian stock market took an even harder beating than the currency itself, spiraling into what could only be described as full-blown panic.
[IDX: 508.65 (-46.83)]
Leaning comfortably back in his cushioned chair, Seok-won watched the Indonesian market chart on his monitor while on the phone with Porter, who had since returned to Japan.
[On top of the Chinese-Indonesian issue you mentioned, there's also the problem of Indonesian companies that avoided complicated local loans by borrowing large amounts of cheap U.S. dollars. Now, they're scrambling to hoard dollars to cover their debts, which is accelerating the rupiah's crash.]
"With the rupiah collapsing, the dollar-denominated debt and interest they owe is ballooning. I'd say they're in full-on crisis mode."
[Exactly.]
Seok-won let out a bitter sigh, gripping the receiver. South Korea had gone through the same thing during its own financial crisis — a flood of short-term foreign debt turning toxic in the blink of an eye.
[It's only natural to want to insure yourself when you see a financial tsunami on the horizon.]
"And once the rupiah hits rock bottom, they can convert their hoarded dollars back and make a killing on the exchange rate."
[That's probably part of their play, yes.]
It was hard to blame them. After all, a company's purpose was to pursue profit.
'In fact, failing to act swiftly in a crisis like this could threaten a company's very survival.'
When the IMF crisis struck Korea, companies that had failed to prepare or even recognize the signs were wiped out without a fight. Meanwhile, those who read the room early, quietly stacked their dollars, and took countermeasures, not only survived but went on to thrive — acquiring fallen rivals and massively expanding their reach.
Shaking off the thought, Seok-won moved his mouse and pulled up a chart of the rupiah's exchange rate beside the stock index.
"If the perception that the rupiah will keep falling takes hold, it won't just be hedge funds. Other investors will join the selling frenzy, and the plunge will only accelerate."
[I agree completely. If that happens, the Indonesian market will crash below 450 points in no time.]
Porter, unlike when he had arrived in Korea two days ago, now spoke with renewed composure.
Seok-won smiled faintly in return.
"Just 60 points to go until we break 450 — shouldn't be too hard."
[By now, I imagine the Japanese firms that signed those option contracts with us are sweating bullets.]
Porter chuckled dryly.
"And the Nikkei futures short positions — how's that looking?"
[With the Southeast Asian currency crisis driving up the yen, fears of a Nikkei crash are mounting. Buyers for futures have completely disappeared.]
"A shame, but nobody with half a brain would go long in this situation."
Clicking his tongue, Seok-won quickly moved on, his tone firm and unaffected.
"Once Choi's team finishes setting up all their short positions, leak the details of our option contracts with the big four Japanese firms to the press."
Porter instantly caught his drift and responded with a knowing nod.
[Heh. Got it. Just the obligation to pay us billions on those options is probably eating them alive — and if the stock price tanks on top of that, they're really going to hate our guts.]
"Once the news gets out that they've lost billions, it'll be hard for the current executives to hold on to their positions. One way or another, it doesn't matter to us."
[Hahaha! That's true.]
Porter chuckled even more heartily at Seok-won's calm, matter-of-fact reply.
After a few more moments of conversation, Seok-won ended the call and hit the speakerphone button, dialing Choi Ho-geun next.
The line rang just briefly before Choi picked up.
[Yes, this is Choi Hogeun.]
"It's me."
[Ah, President.]
"The short-selling prep is complete, right?"
[Yes. We're on standby, just waiting for the go-ahead.]
Seok-won pulled up the stock charts for Nomura, Daiwa, Nikko, and Yamaichi Securities, checking their current prices one by one. Then, without hesitation, he gave the order.
"Then begin the operation. Now."
[Understood.]
The call ended, and Seok-won leisurely took a sip from his coffee mug, murmuring to himself with a small smile:
"Let's see what Manager Choi is really made of."
Meanwhile…
Choi Ho-geun rolled up his shirt sleeves and loosened his tie. After hanging up the phone, he took a deep breath and exhaled slowly.
Facing him was a massive market display showing the stock prices of Japan's four major securities firms:
[Nomura Securities: 1,609.3]
[Daiwa Securities: 885.9]
[Nikko Securities: 790.6]
[Yamaichi Securities: 760.3]
Choi's eyes gleamed like a predator eyeing its prey. He turned to Jung Hwan-yeop seated at the computer.
"What's the mood on the Nikkei?"
"Overall, it's weak, but the stock prices of those four firms haven't dropped significantly yet."
"If they'd already tanked, there'd be less meat left on the bone. This works in our favor."
"Exactly."
Choi glanced around at the rest of the team and asked,
"We've secured enough shares to short?"
"Yes, sir. We deposited ¥16.523 billion in margin into Goldman Sachs' Japan branch account and completed the borrowing based on the collateral ratio."
Yoo Seok-hyun immediately responded with a confident nod.
To avoid leaving any loose ends, they had set up an account under a shell company at Goldman Sachs Japan, using it for all transactions.
To maximize returns from the short-selling operation, they pooled not only their own funds but also all available cash from Daheung Capital's reserves.
The flip side, of course, was that if the short bet failed, the company could go under. That weight was squarely on Choi Ho-geun's shoulders.
"Alright. Begin the sell-off as planned."
"Yes, sir!"
Jung Hwan-yeop and the team picked up their phones in unison, punching sell orders into their keyboards with the other hand in a blur of motion.
Meanwhile, Choi stood with his arms crossed, eyes locked on the massive screen as he anxiously tracked the movement of those four stocks.