The Study Of Foreign Exchange Exposure Management Of A Company

Since the reform of the RMB exchange rate on August 11,2015,the central bank has introduced a series of reforms,including adjusting the RMB intermediate price quotation mechanism,introducing the RMB index,improving the pricing rules of the exchange rate intermediate price through counter-cyclical adjustment factors,and adjusting the foreign exchange risk reserve.With the internationalization of the RMB,the RMB was incorporated into the SDR currency basket at the end of 2015,and the two-way fluctuation of the US dollar against the RMB exchange rate gradually increased after the exchange rate reform.The reform of RMB exchange rate marketization and the increase of bilateral fluctuation of US dollar to RMB exchange rate have brought new challenges to the exchange rate risk management of A company.Company A is a large state-owned holding listed company with fine chemical industry as its core business,covering natural rubber,trade distribution and other international business.It has mature operation and management experience at home and abroad.The company manages capital and capital through both domestic and foreign capital platforms in Shanghai and Singapore,and makes full use of both platforms for exchange rate risk management.The company has more mature exchange rate management experience.Due to the exchange rate risk management is not clear in the past,and the understanding of exchange rate risk is different,the company suffers a larger exchange loss,which has brought a certain negative impact to the company’s performance assessment.Under the new trend of exchange rate,the company needs to improve the existing exchange rate management system according to the characteristics of different exchange rate risks to ensure that the exchange rate risk can be effectively managed,and will not have a great negative impact on the company’s assessment.This paper tries to use the theory of risk management to explore how Company A should use VaR and other risk management tools to improve the current exchange rate management system,and strengthen the exchange rate risk management ability by using forward,option,collar option and other derivatives.It also discusses whether the new exchange rate management model can be used for reference by other state-owned multinational chemical enterprises.