A Case Study On Exchange Rate Risk Management In The Base Of The Currency Fluctuation

Since the implementation of the exchange rate regime reform on July21st,2005,thenominal effective exchange rate is on the rise in general, and at the same time, China’sprice level is also high. The new monetary phenomenon of RMB’s external appreciationand internal devaluation has drawn domestic scholars’ attention. Although the currencyfluctuation is only a macro phenomenon on the surface, it has a profound impact on thecompany business from the micro level. However, due to the relatively stability ofRMB’s exchange rate, Chinese companies’ exchange rate risk management is a bit weak,so in the new exchange rate system, it is unavoidable for companies to deal with theexchange rate risk.This paper, based on the relative theory researches and practical results on thecurrency fluctuation and exchange rate risk from home and abroad, defined someconcepts as currency fluctuation and exchange rate risk, which made the researchcategory clearly. The currency fluctuation only refers to the external appreciation, whichis the entry point of this paper and one of the innovation points of this paper. Then itreviewed the relative theories and in this context it analyzed the status quo and reasons ofcurrency fluctuation. Then this paper takes manufacturing industry as an example to dotargeted research on exchange rate risk management under the currency fluctuations andthis is another innovation points of this paper. This paper deeply studies the impact of thesystem reform of exchange rate on the manufacturing enterprise, analyzes the status quoof exchange rate risk management and summarizes the problems that exist in the processof exchange rate risk management.At last, the paper summarizes a series of the corresponding exchange rate riskmanagement improvement measures, hoping to provide the reference for China’smanufacturing enterprises to implement exchange rate risk management.