In recent years, because the RMB exchange rate has been pegged to the single U.S. dollar, most of my country's import and export companies that use U.S. dollars for settlement have seldom tightened the "string" of the exchange rate. On July 21, 2005, the exchange rate of RMB against the US dollar was adjusted to 8.11 at one time, and the RMB appreciated by 2%. For importers, although the amount of U.S. dollars spent remains unchanged, using RMB to purchase foreign exchange and then spending it is equivalent to saving 2% of RMB costs; for exporters, the amount of U.S. dollars received has not decreased, but the RMB after settlement of exchange But it decreased by 2%. Judging from the situation after July 21, 2005, the exchange rate of RMB against the US dollar was only slightly adjusted, and it has not had a severe impact on import and export enterprises. However, we should see that the adjustment of the exchange rate of RMB against the US dollar implemented on July 21 was not a simple one. A one-time adjustment, it is likely to reveal that China is introducing a new progressive exchange rate formation mechanism. In other words, there is the possibility that the scope of RMB exchange rate floating will gradually expand in the future, and the frequency of exchange rate changes will be determined by the market, forming a market-driven exchange rate system, instead of the central bank using administrative means to directly adjust the RMB exchange rate. Therefore, import and export companies must tighten the "string" of exchange rate. Only by learning, familiarizing themselves with, and coexisting with the new exchange rate system can they effectively avoid exchange rate risks and prepare themselves for invincibility in the business war. Export hedging (1) Export quotation: 1. Export business risks begin with quotation. Generally speaking, in order to avoid exchange rate risks, the foreign currency required for RMB quotation can be used for settlement, or exchange rate terms can be added to the foreign currency quotation, so that the seller or buyer and seller jointly bear the exchange rate risk. However, from the perspective of RMB, which is not an internationally circulating currency, , Since the buyer cannot eliminate exchange rate risk and must seek compensation in price, this method of eliminating exchange rate risk may not be truly beneficial. 2. When quoting in foreign currency, regardless of whether the exchange rate risk is avoided, in principle, the cost calculation is based on the forward exchange rate, and the spot exchange rate cannot be used. In the long-term strategy, the market in strong currency regions should be expanded and quoted in strong currencies. When the non-strong currency market must use the currency of a third country to price, the U.S. dollar or euro can be used, because the exchange rate of the RMB against the U.S. dollar and the euro is relatively stable compared with other currencies. If the same strong currency is used for foreign exchange receipts and payments, the exchange rate risk can be offset. 3. Adopt market diversification strategies to eliminate exchange rate risks. That is, companies can choose different currency quotes. For example, in export quotations, part of the quotation can be quoted in U.S. dollars and part in Japanese yen. For example, if the U.S. dollar rises and the Japanese yen falls, or if the U.S. dollar falls and the Japanese yen rises, the average price of each currency against RMB can be maintained at a certain level. If half of the export goods are quoted in US dollars and half in Japanese yen, then regardless of changes in the foreign exchange market, there will be little impact on the total RMB income from export payments. Theoretically, the foreign exchange risk caused by the quotation is different before the transaction is completed and after the transaction is completed. After the transaction is completed, the exporter will bear the risk of foreign currency depreciation and can sell forward foreign exchange or borrow the quoted foreign currency and sell it in the spot market. Before the quotation is completed, it is not appropriate to sell forward foreign exchange, because the quotation is not completed after the sale, and it coincides with the rise in the foreign currency exchange rate. The exporter must buy from the spot market at a high price for delivery, and will suffer heavy losses. In actual operations, since the causes of exchange rate changes are affected by many factors, it is difficult for companies to seize the opportunity. Therefore, it is recommended to focus on preventing exchange rate risks rather than speculating for profits. (2) Export companies can decide on payment methods based on international market conditions and the creditworthiness of the other party. The payment method is not only related to credit risk, but also involves the financing of funds. Export enterprises export in the form of advance payment and settle the foreign exchange immediately after receiving the foreign exchange, which can avoid the risk of foreign exchange depreciation. Letter of credit is exported after shipment, and interest is discounted for sight letters of credit. For other methods, you can negotiate with a foreign exchange bank for foreign currency advances. During the period of RMB appreciation, the sales should be settled immediately. During the period of RMB depreciation, foreign exchange deposits can be used for temporary storage or investment. Import hedging (1) Import pricing: Chinese manufacturers generally use foreign currencies to price imported goods, and the importing enterprise bears the exchange rate risk. There are also methods of settlement in foreign currencies denominated in RMB. When denominated in foreign currencies, in terms of long-term strategy, a weak currency should be used. Importing raw materials in a strong currency is not conducive to the export of our manufacturers and competition in the finished goods market. Foreign currency denominated risk begins with signing a contract in a foreign currency or accepting a seller's quote in a foreign currency. In order to avoid the risk of foreign currency appreciation, import companies can purchase forward foreign exchange or pre-purchase foreign exchange deposits or investments in the foreign exchange market. When the foreign currency has a clear tendency to appreciate, the payment can be paid in advance or foreign currency can be purchased for storage. When the foreign currency has a clear tendency to depreciate, you can defer the payment or negotiate with a foreign exchange bank to advance the foreign currency, and settle the repayment in foreign currency after the exchange rate stabilizes, thereby reaping the benefits of foreign exchange depreciation. (2) For exchange payment, during the period of RMB appreciation, deferred payment can be used, such as a usance letter of credit. However, the interest rate of a weak currency is often higher than the interest rate of the local currency. Whether it is truly beneficial should be carefully calculated. During the period of RMB depreciation, foreign exchange should be settled as early as possible to avoid losses.

Hope this solves your problem.