The Research Of The Effect Of The Change Of Renminbi Exchange Rate To China Textile International Trading Co.

In the background of more frequently and intensively fluctuation of RMB exchange rate, how to recognize and prevent the exchange risk becomes a very important and realistic issue for import and export enterprises. Chinese enterprises' current exchange risk management theory and practice is not yet mature. With the on-going marketing progress of RMB exchange rate, there are great demands for Chinese enterprises who seek stable operation to manage the exchange risk. Through summarizing the exchange risk in the import and export business of China Textile International Trading Co. and referencing the advanced theory and good experience in the exchange risk management for the international and domestic corporations, this paper analyzes the advantages and disadvantages in the exchange risk management of CTITC. There are four suitable ways to improve the internal exchange risk management: using hedging tools to lock up the future cash flows, making the controllability of the existing management system more effective, detailing the working processes of the system, and formulating the exchange risk management system in detail. The effectiveness of CTITC's exchange risk management can be doubled by strengthening the connections with external parties like suppliers, customers, related banks and government departments. Many SMEs shall take examples from the thoughts and advice in improving the exchange risk management of CTITC.