International Financial System Capstone Project

Total Length: 746 words ( 2 double-spaced pages)

Total Sources: 1+

Page 1 of 2

Soros

International Currency Markets

How did George Soros make money in the international currency markets? Was it something to do with his understanding of the international financial system, or just good luck?

Hungarian-born George Soros started making a name in financial speculation in the late 1960s, when he started investing with his own fund known as the Quantum Fund. Soros's speculations began making big news and he was able to gather a rather large following. The bulk of his fortune came from attacks on major currencies. For example, he was able to off major attacks on the currencies of Great Britain and Italy by speculating against them. Soros would bet against the currencies on the exchange rate market in a big way. The news of Soros's moves would also gather a lot of publicity that furthered his cause. Once the market knew that Soros had bet against these countries then many investors became panicked and followed Soros's led.

On Black Wednesday, September 16, 1992, Soros bet $10 billion that the British pound would fall. This was a move that he had already practiced with Italian lira, which proceeded to devalue.

Stuck Writing Your "International Financial System" Capstone Project?

Then he made a similar move with respect to the British pound, assuming that it would decline against other currencies. Within twenty four hours Soros had made over one billion, and he eventually made over two billion on the entire deal. This caused a great deal of economic uncertainty for the entire country and the Bank of England was actually forced to withdraw the currency out of the European Exchange Rate Mechanism Soros came to be known as "the Man Who Broke the Bank of England."

Sorors was partly clever and partly lucky. Although Soros proved to be a good investor, he was taking a big risk by investing so much in one currency swap. There is a lot of risk in such a move. Furthermore, he was also at least partly lucky that he was able to manipulate the market through his actions. When Soros started making the moves, this created a lot of publicity that made others move with Soros. If the other investors had not played along, then it is unlikely that the market would have moved in Soros's favor….....

Show More ⇣


     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"International Financial System" (2013, June 21) Retrieved July 2, 2025, from
https://www.aceyourpaper.com/essays/international-financial-system-98394

Latest MLA Format (8th edition)

Copy Reference
"International Financial System" 21 June 2013. Web.2 July. 2025. <
https://www.aceyourpaper.com/essays/international-financial-system-98394>

Latest Chicago Format (16th edition)

Copy Reference
"International Financial System", 21 June 2013, Accessed.2 July. 2025,
https://www.aceyourpaper.com/essays/international-financial-system-98394