The Study On Small And Medium-sized Foreign Trade Enterprises Of Foreign Exchange Risk Management

China began to implement a managed floating exchange rate regime from July21,2005, the exchange rate of RMB is no longer pegged to the U.S. dollar only, The RMB exchange rate mechanism became more flexible, what makes the exchange rate more uncertainty. Due to the strength of the weak, small-scale, the insensitive to the information on the foreign exchange market, lack of ability to resist risks, the varies of currency exchange rates can easily make Small and medium-sized foreign trade enterprises loss the price advantage. Therefore, they are easily to suffer a loss in the current flexible exchange rate mechanism. In order to operate better, they need to seek effective ways to relieve the risk actively. Obviously, through the study of specific small and medium-sized foreign trade enterprises’management on foreign exchange risk can give a guide to other small and medium-sized foreign trade enterprises. In this paper Small and medium-sized foreign trade enterprises Xincheng Embroidery Import and Export Company is selected as a example to teach small and medium-sized foreign trade enterprises how to avoid the risk of exchange rate effectively. This paper describes the research background, research status and articles on foreign exchange risk management at home and abroad, study and research purposes. Elaborated Foreign exchange risks and their impact on trade related theories, including the concept of foreign exchange risk, causes, classification, foreign exchange risk, exchange rate fluctuations and trade development theories and currency risk prevention theory. What’s the most important is selected a small and medium-sized foreign trade enterprises Xincheng Embroidery Import and Export Company as a case study, firstly, give a introduction of Xincheng Embroidery Import and Export Company, and next, analysis three major foreign exchange risk which Xincheng Embroidery Import and Export Company faced in the background of current frequent fluctuations in exchange rates and the appreciation of the RMB. And specific measures were introduced when the X company exposed to foreign exchange risks, what’s a relevation for other small and medium sized foreign trade enterprises. Then suggestions on foreign exchange risk prevention which small and medium sized foreign trade enterprises could used are arised on the basis of case study. In the background of frequent fluctuations in exchange rates, each of the small and medium-sized foreign trade enterprises must improve awareness of foreign exchange risk, by optimizing the personnel of foreign exchange risk and introduction of relevant talent, combined with their own environment, the industry and the actual situation of each transaction to select the appropriate foreign exchange risk management methods, and select the appropriate financial instruments according to the different type of foreign exchange risk. To some extent, the loss which brought by foreign exchange risk must be able to minimize.