Research On Foreign Exchange Exposure Of Energy And Material Enterprises In China

Financial crisis has broken the traditional international economic situation. Management of strategic energy becomes one of the economic growth engines, and is increasingly paid attention by various nations. China has abundant energy reserve, and is one of the top nations in energy and raw material consumption. To maintain robust economic growth, China has to attach more importance to energy and material industries. With the collapse of the Bretton Woods System, the world economy enters into era about floating exchange rate. Chinese exchange rate regime becomes compatible with international market, and since July 21st 2005, it has started to implement the managed floating exchange rate system with reference to a basket of currencies, which based on market supply and demand. Change of exchange rate regime will impact enterprise value and macro-economy necessarily. In this complex background, energy and material enterprises are confronted with what foreign exchange exposure situation, whether their financial structure influences their exchange risk, and how to increase enterprise managerial and control ability of foreign exchange exposure, these researches are practically significant.First introduce the energy and material problem, external and domestic studies about foreign exchange exposure, theoretical genres, and research development. Definite concepts and assortment of foreign exchange risk and foreign exchange exposure, introduce international mainstream econometric Augmented Market model, and discuss process which Jorion brought rate of market portfolio return as control variable, and improved model to general form based on Adelr-Dumas model. Recommend solution about multicollinearity between rate of market portfolio return and exchange rate, investigate corporation foreign exchange risk influencing factor model, and apply series improved models to analyze energy and material industrial and corporate exchange exposure condition in our country concerning American dollar, Euro, Hong Kong dollar and Japanese yen respectively.Research shows that foreign exchange exposure incidence of energy and material business is quite high in our country. Various kinds of international currencies exchange fluctuations effect firms differently on direction, degree and range. Enterprise characteristic analysis regarding to foreign exchange exposure finds that certain characteristics indeed influence the level of exposure. According to empirical analysis, energy and material corporations in our country have to improve foreign exchange risk management competency. Finally it is presented some suggestion.