Measures to deal with exchange rate risk

Ways and measures for enterprises to avoid exchange rate risks:

Agree on a mutually acceptable risk ratio

It is understood that some export enterprises have taken various positive measures to cope with the risks brought about by exchange rate instability. Some enterprises will take the exchange rate factor into account when signing contracts with foreign investors. Both parties will stipulate a mutually acceptable risk ratio as an additional clause of the contract. Usually, both parties bear 5% of the risks. If they encounter stronger foreign merchants, the risks borne by domestic enterprises will be even greater. Usually, China lighting enterprises are in a weak position. In addition, the heads of some lighting enterprises even put forward the idea of using RMB as the settlement unit, but few enterprises can adopt this method. The common ways of exchange rate hedging used by enterprises include: trade financing, using financial derivatives, changing the way of trade settlement, raising the price of export products, switching to non-US dollar currency settlement, increasing the proportion of domestic sales and using foreign exchange wealth management products.

trade financing tools are more common

trade financing is the most widely used hedging method for enterprises at present. About 31% of the sample enterprises surveyed use this method. The main reasons include: First, trade financing can better solve the problem of capital turnover of foreign trade enterprises. With the rapid growth of China's foreign trade export, the competition among export enterprises is becoming increasingly fierce, and the foreign exchange collection period is prolonged. It is urgent for enterprises to solve the cash circulation problem between export shipment and foreign exchange collection period. Through short-term trade financing methods such as export bills, export enterprises can obtain funds from banks in advance, effectively solving the problem of capital turnover. At the same time, enterprises can also lock in the amount of foreign exchange in advance to avoid the risk of RMB exchange rate changes. Second, the cost of trade financing is relatively low. In the composition of trade financing methods, the proportion of import and export bills of lading is relatively high (about 8%), mainly because the term of export bills of lading is short (generally within one year), which can better alleviate the liquidity shortage of foreign trade enterprises. In addition, some enterprises also use long-term trade financing methods such as forfaiting.

the use of financial derivatives has increased

after the exchange reform, the development of China's foreign exchange market has accelerated, the subject and scope of RMB forward trading have been improved and expanded, and financial derivatives such as foreign exchange swaps have been introduced. At the same time, a series of supporting measures have been taken in foreign exchange management, which has broadened the financial hedging channels of exchange rates for enterprises.

the main characteristics of enterprises using financial derivatives are as follows: first, they use more forward foreign exchange settlement and sale tools. After the exchange reform, the business scope and transaction subjects of forward settlement and sale of foreign exchange have been expanded, the inter-bank RMB exchange rate forward transaction has been launched, and commercial banks have expanded their exchange rate hedging services for enterprises, which has facilitated the forward settlement and sale of foreign exchange for enterprises to a great extent and further met the hedging needs of enterprises. The survey shows that the use of forward foreign exchange settlement and sale instruments accounts for 91% of financial derivatives. Second, some enterprises use foreign exchange swaps and overseas non-deliverable forward (NDF) tools. Since the introduction of foreign exchange swap business after the exchange reform, some enterprises in Fujian, Guangdong, Jiangsu, Shandong and Tianjin have begun to try to use this new financial derivative. Although the proportion of business volume is relatively small, the development momentum is good. Some foreign-funded enterprises and Chinese-funded enterprises with branches or partners abroad also hedge their exchange rates through overseas RMB NDF tools.

exchange rate locking

signing a contract with an exchange rate locking company (export treasure). Exchange rate locking means that an export enterprise signs a forward exchange rate locking contract with export treasure to stipulate the currency, amount, exchange rate and delivery period of RMB against foreign exchange for settlement in the future. On the delivery date, if the appreciation of RMB causes the loss of enterprise profits, the export enterprise can lock the currency, amount and exchange rate determined in the contract according to the forward exchange rate, and handle the compensation business for the loss of foreign exchange settlement with Zhonglibao.

its template is like the bank's forward settlement and sale of foreign exchange, but it has certain simplification in the amount locking, confirmation conditions and procedures. At the same time, the export treasure is humanized and only charges corresponding handling fees, and the exchange rate locks the delivery date, and the exchange rate rises, and the extra part is also owned by the enterprise itself.

this method is suitable for most enterprises and simple to operate. Measures taken by Japanese enterprises to deal with foreign exchange risks:

Short-term measures

1. forex futures trading

The collapse of the Bretton Woods system in the 197s directly prompted the United States to introduce foreign exchange futures. In Japan, forex futures trading has been adopted by most enterprises to avoid financial risks. According to the statistics of Japan's Ministry of Economy, Trade and Industry, about 44% of Japanese enterprises will choose forex futures trading to avoid risks.

2. Expand settlement in Japanese yen

Foreign exchange risk mainly exists when foreign currency is used for foreign transactions. If domestic currency is used for settlement, foreign exchange risk can be avoided. Therefore, since the mid-198s, Japanese companies have been using Japanese yen to settle transactions, especially in terms of imports, and the settlement rate of Japanese yen has increased from 1% in 1986 to 25% in 24.

3. Balance of foreign exchange assets

In the mid-198s, many Japanese multinational companies began to set up financial operation companies in Europe and other places to manage and balance foreign exchange assets from the overall consideration of the company through hedging and adjustment of creditor's rights and debts. However, this measure is limited to multinational enterprises, and it is difficult to apply to small and medium-sized enterprises. Only 4% of enterprises in Japan take this measure.

4. Reverse trade balance

The appreciation of the yen is beneficial to imports but not to exports. Therefore, large Japanese companies with both export and import business, mainly general trading companies, have taken measures to reduce exports and expand imports to avoid the risks brought by the appreciation of the yen and maintain the company's profits. However, this method is also less applicable to enterprises, only about 4%.

5. Price Pass-on

Part of the increase in export costs caused by the appreciation of the yen is passed on to the price of export commodities, and some risks are borne by overseas importers. However, in the fierce market competition, this method is difficult.

medium and long-term measures

short-term financial measures cannot completely avoid foreign exchange risks, so we must start with medium and long-term product structure adjustment. Japanese enterprises have taken measures such as increasing the added value of products and enhancing their competitiveness, so as to truly overcome the adverse effects brought about by the appreciation of the yen.

1. Adjust industrial structure, increase added value and enhance industrial competitiveness

First, increase added value of products through technological innovation and differentiation strategy. For example, Japanese TV sets have gone through the process of continuous upgrading of black-and-white TV sets, color TV sets, flat-screen TV sets and digital TV sets, and automobiles have also realized the transformation from Volkswagen cars to advanced cars and hybrid cars. Second, we should reduce production costs through technological innovation, increasing the import of cheap parts and reducing energy consumption.

2. Accelerate overseas transfer, strengthen overseas production system and expand multilateral trade

Make full use of the advantages brought by the appreciation of the yen, establish a global production system, increase the proportion of local parts procurement, cultivate local cooperative enterprises and expand multilateral trade. This can not only improve the resistance to exchange rate changes, but also establish a global internal division of labor system and promote the export of raw materials and parts. Japan's auto industry has outstanding performance in this respect. Since the 198s, Toyota and other Japanese auto companies have started to produce in the United States, which not only solved the trade friction between Japan and the United States, but also expanded the market share of Japanese cars in the United States. By 1995, the cars produced by Japanese auto companies in the United States had accounted for 2.7% of the American market share, while in 1985 this figure was only 2.%.