foreign exchange risk management strategy
foreign exchange risk management
atlas of foreign exchange risk management
(1) complete offset strategy
that is, various measures are taken to eliminate foreign exchange exposure and fix expected returns or fixed costs, so as to achieve the purpose of hedging. For a bank or an enterprise, it is to make up all the foreign exchange positions held. In general, it is safe to adopt this strategy, especially for weak strength, lack of foreign experience, insensitive market information and large exchange rate fluctuations.
(2) Partial compensation strategy
That is, measures are taken to clear part of the exposed amount and keep part of the insured amount, trying to leave some opportunities for making money, and of course, some possibilities for losing money.
(III) No offsetting strategy
That is, the amount of foreign exchange exposure is allowed to be exposed to foreign exchange risks, which is suitable for situations with small exchange rate volatility and small foreign exchange business volume. In the face of low risk, high income and bullish foreign exchange rate, enterprises are also easy to choose this strategy.
the process of foreign exchange risk management
(I) Identifying risks
Enterprises should know what foreign exchange risks exist in foreign transactions, whether they are trading risks, accounting risks or economic risks. Or understand which foreign exchange risks are major and which are secondary; Which currency is more risky and which currency is less risky; At the same time, it is necessary to understand the duration of foreign exchange risks.
(II) Measuring risk
Comprehensively analyze the obtained data and exchange rate situation, and calculate the risk exposure position and risk gain and loss value to grasp the extent of these exchange rate risks and how much losses will be caused.
exchange rate risk can be measured by direct risk measurement and indirect risk measurement. According to the characteristics of risks, exchange rate risks can be measured from different angles, so as to provide more accurate basis for avoiding risks.
(3) risk avoidance
means taking measures to control foreign exchange risks on the basis of identification and measurement to avoid large losses. The determination of exchange rate risk avoidance scheme needs to choose specific avoidance methods under the guidance of the exchange rate risk avoidance strategy of enterprises in international trade. Enterprises should combine their own nature on the basis of scientific risk identification and effective risk measurement. The scale, scope and development stage of the business and other business characteristics of the enterprise, adopt a comprehensive avoidance strategy, a passive avoidance strategy or an active avoidance strategy. All kinds of evasive strategies only have different application conditions, and there is no difference between advantages and disadvantages.
On the basis of determining its hedging strategy, enterprises further choose their hedging methods. There are two kinds of hedging methods for enterprises to choose:
One is to avoid exchange rate risks by combining trade negotiations with business strategies; The other is to use financial derivatives to avoid trading risks, mainly including: futures, options and other financial derivatives. Different methods correspond to different operations, but the purpose is to make? Uncertainty? Be determined, so as to avoid risks.
principles of foreign exchange risk management
(I) principles of ensuring macroeconomics
in dealing with the microeconomic interests of enterprises and departments and the macroeconomic interests of the country as a whole, enterprise departments usually try their best to reduce or avoid foreign exchange risk losses and pass them on to banks, insurance companies and even national finance. In practical business, we should combine the interests of the two as well as possible to prevent risk losses.
(II) Principle of Classified Prevention
For different types and transmission mechanisms of foreign exchange rate risk losses, different applicable methods should be adopted to classify and prevent them, so as to be effective, but it is forbidden to copy them mechanically. For the risk of transaction settlement, we should take the choice of pricing and settlement currency as the main prevention method, supplemented by other methods; For the exchange rate risk of bond investment, various preventive methods should be adopted. For the risk of foreign exchange reserves, we should give priority to the diversification of reserve structure and make timely foreign exchange replenishment.
(3) The principle of prudent prevention
From its practical application, this principle includes three aspects:
(1) making risks disappear;
(2) shifting risks;
(3) avoid losses and gain from risks.
especially the last one is the ideal goal that people pursue.