Currency Crash: How Millennium Management Made $40 Million Betting Against the Egyptian Pound

George Soros famously earned $1 billion betting against the British pound in the early 1990s, predicting that the English central bank would devalue its money compared to other European currencies. 

Currency investors expect volatility, but a massive score in a single trade is still infrequent. However, a recent disruption in the Egyptian currency markets created an opportunity for perceptive prop trader Naveen Choppara of Millennium Management, who single-handedly put together one of the year's most profitable trades.

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A Country In Crisis

Few countries have been hit harder economically than Egypt over the last few years. Series after series of adverse shocks have influenced Egypt's economy, like the COVID-19 pandemic, war in Ukraine and war in Gaza. But in reality, Egypt's problems go back much further, as foreign investment in the country has been dragging for nearly a decade, and high inflation already was ravaging the currency.

Expanding deficits, domestic mismanagement and external events like the war in Gaza came together to hammer the Egyptian economy. Headline inflation rose to 38% in the country in September, and it is estimated that nearly 60% of Egyptian citizens now live at or below the poverty line.

Facing severe and overwhelming economic trouble, the Central Bank of Egypt was forced to act with authority. On March 6, the central bank unexpectedly ballooned its key interest rate by 600 basis points (or 6%), which sent the Egyptian pound plummeting in minutes. But this move wasn't unexpected to everyone in the markets. Choppara had been keeping an eye on Egyptian currency for a while, waiting for a chance to pounce.

Executing The Trade

Choppara joined Millennium Management in 2023 after a multiyear stint at Goldman Sachs trading forex and emerging markets. Noticing the crisis brewing in Egypt, Choppara used his expertise in currency trading to make a wager against the Egyptian pound, believing that the central bank would have no choice but to devalue it to avoid economic collapse. 

To build his position against the Egyptian pound, Choppara used non-deliverable forwards (NDFs), a type of futures contract. An NDF allows a trader to bet on the price of a currency or commodity without taking delivery of the asset, which is helpful for companies that operate in different countries and must protect against currency risk. Using NDFs, Choppara wagered that the price of the Egyptian pound would decrease against the U.S. dollar, allowing Choppara to profit from the difference in the contract price and the spot price should the pound fall.

The pound was instantly diminished when the Central Bank of Egypt announced its surprise 600-point rate hike. The currency dropped 38% rapidly, and Choppara's position exploded in value. At the close of the trade, Choppara had earned $40 million for Millennium Management and pocketed an $8 million bonus for his efforts.

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