The forward exchange rate is the exchange rate stipulated in the agreement. According to the agreement, the US dollar is set at 6.80 against RMB, while China enterprises expect it to drop to 6.75, which means that RMB may appreciate relative to the agreement, and the exchange cost is higher relative to the agreement. In other words, if the exchange rate is as expected after 90 days, the signed agreement can reduce the exchange cost of the enterprise.

In other words, the enterprise's risk is that RMB appreciation will lead to an increase in foreign exchange costs after 90 days, and China enterprises should hedge against the risk of this increase in costs.

So how to operate specifically? China enterprises can sign forward contracts, futures or options with the exchange (all three can be used for hedging). Take the forward contract as an example, it is agreed that 500,000 USD will be converted into RMB at the exchange rate of USD: RMB = 6.80 after 90 days to hedge the risk of RMB appreciation after 90 days. However, forward contracts also have great risks. If you sign a foreign exchange option, you can lock in the risk. At this time, I should buy a foreign exchange option and agree that I have this right after 90 days, that is, I will deliver 500,000 dollars with the option seller at the exchange rate of USD: RMB = 6.80 and convert the USD into RMB. In this case, if the maturity exchange rate is less than 6.80, we can choose not to execute it, so the risk is locked in the price range of the call option.