Everything has its own risks. In the foreign exchange market, risks are everywhere. If you are not careful, you may lose. Let me give you a detailed introduction.

Principles of foreign exchange risk prevention

In the process of preventing foreign exchange risks, it is a matter of principle which method is ideal and to what extent the risks are reduced.

1. Minimum cost principle. Using any method to avoid foreign exchange risks requires a certain cost, so among many methods, there is a cost comparison problem of choosing which method specifically. If the loss caused by foreign exchange risk is less than the cost of taking preventive measures, then it is unnecessary to adopt this method. For example, in order to avoid the risk of foreign currency exchange rate appreciation caused by forward payment, enterprises often buy foreign currency at spot exchange rate. To measure the feasibility of this method, it is necessary to analyze whether the risk of foreign currency appreciation brought by forward payment is greater than the interest loss that enterprises should receive when buying spot foreign currency in local currency. If the enterprise's local currency funds come from loans, it needs to be compared with the loan interest due to determine the choice of this hedging method.

2. Avoidance is the main principle. The purpose of forecasting exchange rate changes and choosing appropriate operation methods for enterprises is not to use risks for speculative activities, but to avoid possible risks. According to this principle, enterprises should be conservative when choosing various methods, and should not turn financial activities into a bet and take radical risk measures to earn greater profits.

3. The principle of prediction first. Everything is established in advance, and it is abolished if it is not foreseen. The successful avoidance of foreign exchange risks must be based on the scientific prediction of exchange rate changes. This requires us to combine theory with practice, quantitative with qualitative, and historical with future to extrapolate and predict the trend of exchange rate fluctuations when choosing specific operation methods, so as to ensure the accuracy and effectiveness of the implementation methods.

Twelve measures to guard against foreign exchange risks

1. Choose the currency used in the transaction correctly.

2. Take the form of transfer settlement.

3. Adopt foreign exchange hedging clause

4. The appraisal result is expressed in the currency of a third country or "a basket of currencies".

5. Use spot foreign exchange transactions to prevent risks

6. Prevent foreign exchange risks by borrowing.

7. Use forward foreign exchange transactions to prevent risks.

8. Use option trading to prevent foreign exchange risks.

9. Use swaps to hedge against foreign exchange risks.

10. Use "forfaiting" * * * as a letter * * * to prevent foreign exchange risks.

1 1. Advance or postpone foreign exchange receipts and payments.

12. Buy exchange rate fluctuation insurance.

Risk prevention methods of foreign exchange transactions of enterprises

1. Take currency hedging measures.

Currency hedging measures refer to the appropriate hedging clauses entered into by buyers and sellers in the transaction contract to cope with the risk of exchange rate changes during the transaction negotiation. Commonly used are hard currency hedging clauses and basket currency hedging clauses. The hard currency hedging clause refers to the agreement in the transaction contract that it is denominated in hard currency and paid in soft currency, and the exchange rate of the two currencies at that time is stated. During the execution of the contract, if the exchange rate of the payment currency falls, the contract amount shall be adjusted in proportion and calculated according to the payment exchange rate, so that the paid-in currency value is the same as when the transaction contract is signed.

A basket currency clause refers to the clause that both parties explicitly link the payment currency with the comprehensive value of a basket currency in the contract, that is, determine the exchange rate between the payment currency and various currencies in a basket currency when concluding the contract, and stipulate the adjustment range of exchange rate changes. If the exchange rate changes beyond the specified range when the payment is due, it will be adjusted according to the exchange rate at the time of payment to achieve the purpose of maintaining the value. Usually, the SDR is used as a "basket" of currencies.

2. Choose a preferential pricing currency

In the international financial market, there are soft currency and hard currency. Hard currency refers to a currency with a relatively stable exchange rate and a floating trend; Soft currency refers to the currency whose exchange rate is unstable and has a downward trend. It is also an important way for enterprises to guard against foreign exchange risks by choosing the appropriate currency in the transaction process.

Enterprises in the transaction process, the choice of pricing currency should follow the following principles:

* * *1* * Select a freely convertible currency. It is convenient to carry out exchange transactions in the foreign exchange market at any time according to the changing trend of exchange rate, and transfer the exchange rate risk of currency.

* * * 2 * * Use soft currency for payment and hard currency for receipt. But in practice, the "soft" or "hard" of various currencies is not absolute, and their soft and hard conditions often change. Strictly speaking, this method sometimes can't guarantee economic entities to avoid losses caused by exchange rate changes. In order to avoid exchange rate risk, enterprises can adopt other hedging tools, such as forward foreign exchange transactions and currency hedging clauses, when they cannot "export currency and import soft currency". In a word, enterprises should be both principled and flexible.

3. Use forward foreign exchange transactions.

Forward foreign exchange transaction refers to the contract that an import and export enterprise handles the purchase and sale of * * * * foreign currency payment with a bank after the contract is signed. The trade settlement date is the contract delivery date, and the contract exchange rate is determined in advance according to the forward exchange rate of the corresponding period.

4. Adopt international loan method

International lending law means that in the medium and long-term balance of payments, on the one hand, enterprises use international credit to obtain financing; On the other hand, transfer or offset foreign exchange risks. There are three main forms: export credit, "deferred payment" and guaranteed payment agency.

*** 1*** export credit is the most commonly used financing method in international trade. The exporter's bank directly or indirectly provides advance payment to the importer, the main purpose of which is to promote export by providing funds to the importer. There are two kinds of export credit: buyer's credit and seller's credit. By means of export credit. Exporters' foreign exchange risks are passed on to banks or offset.

* * * 2 * * The so-called "deferred payment" business refers to the long-term and medium-term bills issued by the exporter to the importer in the large-scale machinery and equipment transaction with deferred payment, which are sold to the export bank after the first-class bank guarantee and the importer's acceptance, and the amount is deducted from the interest discount and other expenses. Because the exporter sold it at the time of discount, the refusal of future bills of exchange has nothing to do with the exporter. At the same time, exporters can get cash immediately and transfer foreign exchange risks to discount companies or banks.

***3*** The secured payment agent means that in international trade, the exporter can't get the importer's bank to open a letter of credit to collect the payment, and he is not sure about the payment, that is, he resells the importer's documents payable to the secured payment agent in the form of discount, and gets 80%-90% of the accounts receivable, and the rest is collected at maturity. Because exporters get most of the payment in advance, they can reduce the foreign exchange risk.

5. Take the way of settlement in advance or delay.

The method of advancing or delaying the settlement of foreign exchange means that in the balance of payments, enterprises predict the changing trend of the exchange rate of the payment currency and advance or delay the receipt and payment of foreign exchange funds in order to reduce the foreign exchange risk.

6. Hedging of derivative financial instruments

Hedging with derivative financial instruments mainly includes currency options, currency futures and swap foreign exchange transactions.

*** 1*** currency options give contract buyers the right to buy or sell a certain amount of a certain currency at a specified price within a certain period of time. The buyer in option contracts has the right to execute the contract without the obligation to execute it, so that the enterprise can choose whether to execute the contract according to the future exchange rate changes, thus achieving the purpose of preventing foreign exchange risks. The disadvantage is that the amount and duration are difficult to be completely consistent with spot trading, and a certain option fee has to be paid.

***2*** Currency futures are actually forward foreign exchange contracts with standardized amount, term and expiration date. The hedging of futures trading refers to a transaction in the spot market with the opposite direction and the same term, and the profit in the futures market is used to offset the loss in the spot market. The disadvantage is that futures contracts are standardized, and it is difficult to be completely consistent with the spot market in terms of amount and duration, and it is impossible to achieve the goal of completely preventing foreign exchange risks.

***3*** Swap foreign exchange transaction means that the buyer sells the currency A delivered on one day, and at the same time sells the currency A delivered on another trading day to buy back the currency B. The characteristics are that the two foreign exchange transactions are equal in quantity, opposite in direction and different in delivery date.