Study On Exchange Rate Risk Of Import & Export Companies

Since China entering WTO in 2001, the foreign trade volume rise rapidly. In the meantime, the exchange rate has attracted increasing attention from foreign trade companies. Foreign trade companies of different sizes, industries and ownerships should learn the importance of exchange rate risk management because it is an core part of corporate management.First of all, this essay tries to categorize FX risk into three categories: trading risk, economy risk and conversion risk. As conversion risk only affects the accounting book, we try to analyze the other two risks in more detail.Secondly, we discuss the current management problems of FX risks in foreign trade companies through case study methods. And give practical risk management advises according to the current practices in foreign trade.In summary, this essay try to give applicable answers for Chinese trading companies based on theoretical and practical analysis.