Application Research Of Exchange Rate Risk Hedging For China’s Foreign Trade Enterprise

The Chinese government is playing a beneficial role in promoting the China’s economy tojoin the global division of labor. The process of internationalization of the RMB and interestmarketization is speeding up. The foreign trade enterprises is forward-looking insufficient toadapt to the global market-oriented trend.This paper study how the foreign trade enterpriseshedge the foreign exchange risk based on analyzing the exchange rates, interest rates andmacroeconomic data from the exchange rate reform in July2005. This paper recommendsportfolio choice of hedging strategies for different styles of foreign enterprises, such as arbitrage,hedging and speculation, etc. This paper also recommends the cross-border trade financecollaborative path and method in foreign capital markets to reduce financing costs, increasefinancing and facilitate the fund security.This paper selects two typical foreign trade enterprises in the Pearl River Delta and YangtzeRiver Delta as the studying case. Through the detailed analysis of their hedging strategy in termsof exchange rates and interest rates, the study shows that the timely and appropriate financialstrategies will have a positive impact on the operating results of the foreign trade enterprises.Inthe global economic integration, foreign trade enterprises will face more and more complexexchange rate and interest rate environment. So they need to establish the team of talents withglobal thinking and financial knowledge and to develop and implement financial strategies tocope with the future challenges of globalization.