I. Internal measures for risk management of foreign exchange transactions
(1) Preventive measures that can be taken when signing a contract:
(1) Make a good choice of pricing currency: ① Local currency pricing: a country suitable for currency convertibility. ② Hard payment and soft payment: try to use coins for export and foreign currency claims, and try to use soft coins for import and foreign currency debts. (3) Multi-currency pricing method (soft and hard collocation) (2) Adjustment pricing method: it can reduce but not eliminate foreign exchange risks. (3) Adding currency hedging clauses in the contract.
Currency hedging refers to selecting a currency that is inconsistent with the contract currency and has a stable value, and converting the contract amount into the selected currency. A. Foreign exchange hedging clauses The export contract stipulates that the value should be preserved with coins and paid with soft coins. When paying, adjust the payment amount according to the change range of exchange rate between coins and soft coins. B. Hedging clause of integrated currency unit: Integrated currency unit (such as SDR) consists of a certain proportion of coins and soft coins, so its value is relatively stable, and its hedging can reduce risks.
(2) Advance or delay receipt and payment: that is, change the receipt and payment date of the relevant currency according to the exchange rate change of other currencies.
(3) Matching management: the practice of balancing the inflow and outflow of foreign currency in terms of currency, amount and time.
(1) Balance method: refers to the creation of funds with the same currency, the same amount and the same term as the risks in the same period.
(2) Matching method: A company has foreign exchange risk of a certain currency, and it can create another currency associated with that currency.
(4) Write-off method (net settlement) means that subsidiaries of multinational companies often offset the receivables and payables arising from their internal trade, and only pay off the offset net amount regularly, thus reducing the existence of net open positions.
Two. External measures of foreign exchange risk management.
External management refers to the use of financial markets (foreign exchange market and money market) to avoid foreign exchange risks when internal management is not enough to eliminate net foreign exchange positions.
Foreign exchange market (forward foreign exchange transactions, foreign exchange futures, foreign exchange options, swap transactions)
Money market hedging refers to offsetting the foreign exchange risk of existing creditor's rights and debts by borrowing in the money market.
Basic methods of foreign exchange risk management:
1. Forward Contract Law.
2. Borrow-Spot-Invest (BSI).
3.Lead-spot-invest (LSI for short).