In English history date of September 16, 1992 has the symbolic title “Black Wednesday”. At that day American investor and philanthropist George Soros pulled down British currency rate assuring the rise of financier and successful trader career, gaining on GBP/USD sharp fall (12%) more than $1 bln. in 24-hour period. From that very day they call Soros “the man who broke the Bank of England”.

Beginning from the mid 1992 Soros having the complete arsenal of trading abilities, sharp and intuitive mind, go-getting spirit, education, and certain speculative experience (not always successful) began buying sterling in few amounts in order not to induce any suspicions. Being 62 years old and having sufficient financial backup, George Soros had a possibility to buy 15 bln Deutschemarks at the rate of 2.8180 GBP/DEM causing sharp range of demand/supply at the financial market with a risk of currency deficit and strong decrease of sterling rate.

Thereafter the gained experience became a theory according to which the decision to buy and sell is taken on the basis of forecast prices forecasting. As the human suspended state is not stable psychologically it is easily influenced by the information. Risks of breakdown of any national currency consist of subsequent informational strokes via mass media with real actions of financial market participants – currency profiteers staggering the financial market.

During the period of speculative trading by Soros the British Chancellor of the Exchequer Norman Leymont raised the repo rate from 10% to 12% and then to 15% trying to protect the pound from speculations. Fortunately for Soros any currency interventions made by market participants and European national banks failed to prevent the pound sterling fall. By the late September the rate was fixed at the level of 2.509 GBP/DEM and at that moment the American profiteer bought depreciated pounds for 15 bln marks. The increased demand for pound raised its rate and let George Soros gain about $1-1.5 bln.

The fortune of George Soros is now estimated as $7.2 bln. It is known that he has donated more than $5 bln for charity purposes.

Regards, Dennis Vydrin
Forex Ltd.

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