Study On The Management To Exchange Rate Transaction Risks Of Foreign Trade Enterprises

Started from 21st July,2005, when The People's Bank of China announced the reform to the exchange rate system, Chinese exchange rate system entered a new period. The exchange rate of RMB/USD appreciates gradually and the fluctuation range becomes wider. The exchange rate risks that foreign trade enterprises are facing increased significantly. This is not only a challenge but also an opportunity. The selection of scientific exchange rate prediction method and the establishment of thorough transaction risks early warning system, can reduce human factors in exchange rate prediction and simplify the method selection to avoid exchange rate transaction risks loss. Assisted by proper flow control and organization and institution establishment, foreign trade companies can lower the exchange rate risks loss to affordable scope without missing favourable exchange rate fluctuation and opportunities to avoid transaction risks.This thesis uses the definition of "Value at Risk"(VaR) for reference, simplified the calculation of VaR by introducing the concept of " Ratio at Risk"(RaR) and put forward Historical Simulation Method to calculate RaR with common EXCEL software. The usage of secondary exponential smoothing method to predict exchange rate achieved the accuracy acceptable by normal foreign trade enterprises. This thesis also put forward tentative plan to establish double exchange rate transaction risks early warning systems, on single business and company integrated business level respectively. After the flow-sheet analysis, it proposes the transaction risks can be controlled at key business points. Assisted by suitable organization and system establishment, comprehensive exchange rate transaction risks management can be realized. At last it studied an exchange rate risks management case of Jiangxi Nonferrous Metals Imp. & Exp. Co. to reach the goal of dissecting a "sparrow".