The Research On The Management Of Foreign Exchange Of Investment Control Of CSG’s Project Of Steel Rolls

In the new century, economic globalization and investment liberalization are increasing.With the deepening of reform and opening up, especially after joining WTO, more and moreenterprises join the competition in the international market to lend and invest, which has madea significant contribution to the development of China’s socialist market economy. However,China had long been the implementation of a fixed exchange rate system, Small fluctuationsin exchange rates for RMB against major world currencies. Objectively speaking, the fixedexchange rate system shielded some foreign exchange risk for China’s enterprises, whichmade managers in the business not pay enough attention to risks of exchange rate andimpeded foreign exchange risk management research. However, since July21,2005, alongwith the accelerated process of internationalization of the Yuan and RMB exchange rateformation mechanism reform, foreign exchange risk of enterprises was more obvious, evenseriously affecting a number of corporate business developments and improvement ofprofitability. So with the actual business, that strengthen the study of foreign exchange riskmanagement is very important.In China, foreign exchange risk management is a new area, but the research on theforeign exchange risk management was carried out abroad decades ago. For GuangdongShaoguan Iron&Steel Group Co., Ltd.(CSG), the experience of foreign exchange riskmanagement is also very little and both in theory and practice are very immature. A completemanagement system has not been formed. Meanwhile, domestic financial institutions are alsodifficult to provide effective financial tools to meet different requirements. CSG had littlework to do only in these limited ranges of financial tools. That how to draw a more matureinternational foreign exchange risk management experience into CSG steel rolling projectinvestment, and complete with its own characteristics and gradually establish a foreignexchange risk management system to effectively prevent and reduce losses, has become aurgent solved key problems.Completed with the practice in the steel rolled of CSG, this paper analyzed the foreignexchange risk and its the management of CSG steel rolling project investment; describedfactors of the foreign exchange management of CSG steel rolling project; discussed ways toforeign exchange management of CSG steel rolling project; established the model of foreignexchange management of CSG steel rolling project.This paper grasps of China’s enterprises facing a unique environment, through studying the steel rolled as a typical case of foreign exchange management, and try to find a newmethod to achieve foreign exchange risk management by hedging. Firstly, this paper analyzedthe research situations of foreign exchange management and risk management at home andabroad; Secondly, through testing the normal distribution of the daily return of the world’smajor currencies, these relative VaR of major currencies were calculated; Then, two less riskycurrencies were selected to run hedging, of which movements were negative. Finally, anexample was calculated and the advantages and disadvantages of this way were discussed.