A Study Of Foreign Exchange Risk Management Of Foreign Debt

In China,the foreign debt is the major form of foreign investment.Most of the foreign debts are government loans,international financial orgnisation loans and commercial loans.It is welcomed by the enterprises for the great sum,low interest rate and long period. But the foreign debt bears great risks of foreign exchange rate and interest rate.In our country,the companies's awareness of the risk is inadequate. So this paper focused on how to manage the foreign debt by the procedure of modern risk managnment through the ChongQing Metro2. Firstly, this paper compares the foreign debt management condition of our country and foreign countries and points out that the traditional foreign risk management can not meet the needs of risk control. The the foreign debt management is necessary. The four methods and models often used are introduced: Situation Analysis, Sensibility Analysis,Stress Testing and VAR.Then, the problem of two important target choices is discussed: the choice of the cost control target or the profit target and the choice of cash flow or present value target.The misunderstanding of this field is discussed. The mechanism and model of Swap is being introduced. This paper discussed the application of risk avoiding strategy,risk hedge strategy,risk and risk strategy. In the end, the the foreign debt management of ChongQing Metro 2 is penetrated and the suggetions are made for it. Because the foreign debt management is just beginning in our country, nearly no systematic research is made. This reserch paper uses the the risk management theory of foreign countries, analyses the wrong ideas about it and takes the Chongqing Metro 2 for example to make some useful exporation of the foreign debt management of the companies in our country.