Research On RMB Forward Transactions

China has been the world's largest recipient of foreign direct investment. With the promotion of the reform of foreign exchange system in China, it is natural for companies to want to hedge the currency risk. Forward foreign exchange market is the place where companies can achieve their goal .The article describes the exchange rate risk with the RMB' appreciation at first, then introduces the forward foreign exchange sale and purchase and Renminbi nondeliverable-forwards.For the reason that the domestic foreign exchange market is undeveloped, the Renminbi nondeliverable-forwards market operates as an informal mechanism where companies are able to hedge the risk. Though the impact of NDF on the local market is limited for that the local currency is not actually deliverable, Chinese should keep eyes on it. The forward foreign exchange sale and purchase is a special method to avoid foreign exchange risk and to fix foreign exchange cost. The customer must have the legitimate right to import and export or other backgrounds for maintaining value when applying for the forward foreign exchange sale and purchase. This paper analyzes the characteristics and problems of forward foreign exchange sale and purchase.The paper discusses foreign exchange futures, foreign exchange swap and options in the chapter 4. Some strategies are also suggested to build Chinese forward foreign exchange market. The author gets some ideas from the development of NDF market and the forward foreign exchange sale and purchase to build our domestic foreign exchange forwards market, suggests that futures is a good method to hedge exchange rate risk of RMB.