A Study On Chinese Cooperation’s Foreign Exchange Risk Management

With the rapid development of China’s economy, the reform of the RMB exchange rate and RMB internationalization are steadily moving forward, more and more Chinese enterprises go abroad, and the demand for exchange rate increases. The pace of China’s financial and foreign exchange system reform to accelerate, especially our country carried out a major reform of the exchange rate system. The RMB exchange rate is no longer pegged to the dollar, instead it became the reference to a basket of currencies managed floating exchange rate system. The RMB exchange rate fluctuations interval was to further expand, and the exchange rate was to fluctuate more frequently. The RMB exchange rate fluctuations, and the foreign-related enterprises in China with the foreign exchange risk exposure increases further, and the foreign exchange risk will not only have an impact on the enterprise profit through product prices, raw material prices, labor prices, financing costs, but also affects China’s import and export enterprises in the international market competitiveness. Foreign exchange risk as an important aspect of enterprise risk management in enterprises, the whole value system plays a very important role. With steadily moving forward, the continuous development of international trade and the RMB internationalization, and enterprise of foreign business and holdings of foreign currency assets increases yearly, the foreign exchange risk exposure is also increasing. At the same time, to understand and manage the foreign exchange risk of foreign-related enterprises in China is still at the primary stage. The enterprise of foreign exchange risk awareness and attention to the serious shortage of foreign exchange risk degree will not only affect the profit structure of enterprises, but also have an important impact on enterprise value. In this context, it illustrates how the risk of enterprise foreign exchange. How to avoid foreign exchange risk enterprises. How Multinational Corporation of foreign exchange risk management. These are the foreign-related enterprises problems in China with the most need to face and solve.At present our country foreign enterprise foreign exchange risk management consciousness and ability of the poor and based on the foreign exchange risk, enterprises are facing more serious situation. This paper to our foreign-related enterprises as the research subject, carries on research of the foreign exchange risk enterprises are facing, including foreign-related enterprises in China foreign exchange risk, foreign exchange risk, and the influence factors of foreign exchange risk and enterprise the relationship between value and foreign exchange risk management effect. Using the method of combination of theory and practice, the present situation of foreign exchange risk management of inspection of enterprises, it put forward some suggestions. The main innovation to this paper is to combine the theory of foreign exchange risk management of domestic and foreign exchange risk management of China’s foreign-related enterprises practice. To overcome the exchange reform on foreign exchange risk management in our empirical analysis with less difficult foreign-related enterprises, by analyzing foreign exchange risk management theory and Chinese foreign enterprise foreign exchange risk management together, as an example to guide enterprises to carry out foreign exchange risk management.Also. this paper has a rich content of empirical analysis. By calculating the VaR of exchange rate. This paper has estimation of exchange rate risk of Chinese Yuan. Empirical result shows that the GARCH (1,1)-t model performs best, and thus give the exact value of VaR.