The Study On Foreign Trade Of China Foreign Exchange Risk Avoid Method And Strategy On The Background Of New Exchange Risk Policy

Based on the new exchange risk policy on July 2005 and June 2010, China has made a new exchange rate system such as floating exchange rate and frequent fluctuation of exchange rate. For most of the trading company, it is a long way and hard task for them to manage their foreign exchange risk, make effective method and strategy for avoiding exchange risk, stabilize profits and cash flow.From the point view of the trading company, through comparing and analyzing all kinds of trading finance tools and derivatives tools, we discuss how to use these tools to avoid exchange risk considering the company's condition and the exchange rate change. At the same time, exchange rate avoid is a systematic project and to improve the effect of exchange rate avoid, it needs help from every parties including the improved exchange rate risk management level, the better law system and the right exchange risk management object and strategy. For the trading company, it should study the successful case about how to avoid exchange risk, choose the right financial tool to measure risk and avoid exchange risk and make a good exchange risk management decision system so as to protect its currency value on the basis of the balance between cost and revenue and the company's condition.This essay is to provide some views and references through integrating the theory with practice and collecting and analyzing basic data, sheet. We hope it can help for those trading companies.