The Using Of Neural Network Exchange Rate Prediction Model To Avoid Multinational Investment Risk

With the acceleration of economic globalization, the economic activities, based on the multi-national corporations, such as global transaction, investment, becomes the main stream of international trade. However, exchange fluctuation has made a big impact on the trade activities of multi-national corporations and constantly made a big threat on the risk prevention mechanism of multinational investment institution as well. In particular, exchange fluctuation could cause immeasurable loss on the multi-national corporations which have weak awareness of the risk prevention. On August 11, 2015, Central Bank declared that it would adjust central parity rate and devoted to solve the situation where the central parity rate continued to deviate from the market rate in the past period. In the reformation of marketisation of exchange rate, China economy has merged into the world economy. The financial market opens and internationalizes gradually. Many multinational investment institutions such as Chinese multi-national corporations and Chinese commercial banks are more and more affected by the exchange fluctuation. With the continually promotion of marketization of exchange rate, the exchange fluctuation will become more difficult to be measured. In other words, the big loss will be made without the proper forcast.In this essay, firstly, analyzes the domestic and foreign literatures which contains the methods of exchange rate prediction and some research results which uses the neural network to predict exchange rate. Secondly, the essay builds the model of neural network to predict exchange rate and helps the multi-national corporation to avoid the risk by using this ability of the model to predict short-term rate and long-term rate respectivily. Thirdly the essay realizes the importance of the exchange rate prediction in the risk aversion of the multinational investments. In meanwhile, the essay provides a valuable experience for the exchange rate prediction and risk management in the future by setting an example of Citic Pacific. The essay emphasizes that the corporations should find a proper method of risk management to avoid the risk in the multinational investment for itself.Furthermore the essay will improve the theory of exchange rate prediction and make a reference of avoiding risk in multinational investments for China; enrich the risk management of Chinese multinational corporations and enhance the abilities of exchange rate prevention for multinational corporations.