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Does conversion risk need to be guarded against?

Conversion risks need to be guarded against.

Methods and measures to prevent translation risks:

1. Diversified investment portfolio: diversify assets in different countries and regions to reduce the impact of exchange rate fluctuations.

2. Use foreign exchange derivatives: such as forward contracts, futures contracts, options, etc., to lock in future exchange rates, thereby reducing the risk of exchange rate fluctuations.

3. Hold local currency: If there are assets or liabilities that need to be converted into local currency, you can consider holding a certain amount of currency locally to reduce the impact of exchange rate fluctuations.

4. Currency hedging: To offset the exchange rate risk of assets or liabilities by conducting transactions in the opposite direction in the foreign exchange market.

5. Regularly monitor exchange rate fluctuations: regularly track exchange rate changes and take timely measures to reduce the impact of translation risks.

Introduction to futures contracts:

1. A futures contract is a standardized contract that stipulates the obligation to buy or sell an underlying asset at a specific price at a certain time in the future. and rights. Futures contracts are often used to hedge risks and conduct speculative trading.

2. The underlying assets of futures contracts can be commodities, financial instruments, currencies, etc. For example, commodity futures contracts include gold, crude oil, soybeans, etc.; financial futures contracts include stock index futures, bond futures, etc.

3. The trading of futures contracts occurs on the futures exchange, and buyers and sellers trade through the exchange. Futures exchanges provide standardized contracts, including delivery date, delivery method, contract size and other regulations, making transactions more transparent and fair.

4. Futures contract transactions can be divided into two types: buying contracts and selling contracts. A buy contract means the buyer's obligation and right to buy the underlying asset at a specific price in the future; a sell contract means the seller's obligation and right to sell the underlying asset at a specific price in the future.