Study Of Risk Management For Foreign Exchange Business In Jiangmen Rural Commercial Bank

Rural commercial banks have expanded their business into foreign exchanges since their transformation from rural credit cooperatives. As China more and more integrates into the global economy particularly since2000together with the reform of Chinese exchange rate mechanism, financial institutes such as banks have faced higher and higher risks of exchange rate volatilities. Rural commercial banks, subject to the constraint of their short development history, do not have the comparable capacity with traditional commercial banks, in terms of size, staffing, and skills. It has therefore become an urgent issue of how to enhance the capacity of rural commercial banks on foreign exchange risk control.This report is a case study of foreign exchange risk management, with an actual sample of risk management profiles of Jiangmen Rural Commercial Bank. Through the case study, it shed lights on the risk management of foreign exchanges by rural commercial banks, aiming to offer a reference for smaH-and-medium-size commercial banks on risk control over foreign exchange when they carry out such business.This report is structured as follows:it first explored the theories on foreign exchange risk management, laying down the theoretical foundation for this report; then it is followed by a thorough study on the foreign exchange risk management by Jiangmen Commercial Bank, with a proposal of the objectives and principles of foreign exchange risk management; the final part of this report went through the actual practice in foreign exchange, and identified the major risks faced by Jiangmen Commercial Bank. In accordance to the findings, a profile of foreign exchange risk management was designed, in which detailed policy suggestions were highlighted for certain business.