Research On The Application Of SWAP In China’s Commercial Banks’ Exchange Rate Risk Control

On July 21, 2005, the people’s bank of China announced; China will implement the new floating exchange rate system, which is based on supply and demand and under control, adjusting with reference to package currencies. Because of the fixed exchange rate for along time, the commercial banks of our country don’t pay attention to this problem too much and risk management level is out-dated ,which means that commercial banks will face tremendous rate risk as the key players in the foreign exchange market . Therefore, how to effectively guard against rate risk and increase the level of management to our commercial banks? It is an important theoretical and practical significance to risk management of our commercial bank.This thesis is under this kind of background, carry on research to this problem. And the paper will begin from the theory and current management situation of the exchange rate risk management and the Swaps in commercial banks, and by the analysis of the case and demonstration, to know that swap is a effectively tool to control the exchange rate risk. Finally, give the advice about this research, in hope of improving the management level of exchange rate risk and playing a practical reference for the commercial banks in our country.