The Research On The Impact Of RMB Exchange Rate Fluctuation On Foreign Trade Enterprise From Financial Prospective

Since the reformation of currency system in July 21,2005,the RMB continues appreciation and its exchange rate volatility is high to all countries.Due to the economic globalization and financial integration,the degree of integration has raised between China and the global economy.And also,the fluctuation of exchange rate is increasingly playing a significant role in foreign trade enterprise.Under the changeable exchange rate environment,enterprise's exchange rate risk expose gradually.Before the reformation of exchange rate system,our domestic enterprise is under a relatively stable economy and the fluctuation of exchange rate wouldn't heavily affect the foreign trade enterprise.Besides,the management of exchange rate risk hasn't been paid enough attention,while it is lack of relatively complete and scientific management methods.Thanks to the reformation of exchange rate system and the appreciation of RMB,it brings a new opportunity and challenge to our domestic enterprise.As well as that the foreign trade enterprise is strongly awareness of the huge influence which is caused by the exchange rate risk.Hence,to analysis and recognize the influence on foreign trade which is caused by various exchange rate risk has a great theoretical and practical role in effectively avoiding risk.In this essay,on top of that,it will consider financial accounting,the influence of foreign trade enterprise caused by the exchange rate fluctuation as well as how and what the exchange rate risk impact on foreign trade enterprise.After that,it takes methodical analysis and case analysis method to study how the exchange rate and the three risks(trade risk,convert risk,economic risk)affect the enterprise.Then,a further analysis of exchange rate fluctuations on financial statements of the enterprise project,the financial capacity,the influence of the market management will be given.Finally,it will present some useful tips to the foreign trade enterprise according to the case.Meanwhile,it will propose some suggestion to the enterprise and even entire foreign trade enterprise.The essay is consisted by six chapters.They are as followed:The first chapter is an introduction.It mainly introduces the background of research,significance of research,process and frame of research as well as the methodology of research.The second chapter is literature review.It mainly illustrate the domestic and overseas scholars' research achievements which are related to risk of exchange rate and how the risk of exchange rate impact the enterprise's competitive power,value,finance and so forth.At the same time,it will present the argument of the literature review.The third chapter is a theoretical basis.At the beginning,it mainly analysis the exchange rate theories,the risk of exchange rate and exchange rate risk management and related theory.After that,an overview of the RMB exchange rate mechanism history will be offered.Then,it will illustrate the present exchange rate system and the situation of exchange rate fluctuation.The fourth chapter is case analysis basis.It mainly introduces the present development of domestic foreign trade enterprise and analysis the relationship between the exchange rate fluctuation and foreign trade enterprise.Additionally,it takes the normative analysis to study how and in which way the exchange rate fluctuation.affects the foreign trade enterprise.The fifth chapter is case analysis part.It will introduce Luthai Textile Co.,Ltd's industry situation and industry status on the basis of normative analysis.Then it will recognize the characteristics of risk and give a simple measurement through the trade risk,convert risk,economic risk.Lastly,it will show in which way the exchange rate fluctuation affect the company from the angle of reports,financial ability,and marketing project management.Surely,it also will introduce the Luthai Textile Co.,Ltd's strategy to cope with risk.The sixth chapter is the case summary.It demonstrates the both upside and downside of how the company cope with exchange rate risk.As well as that,it proposes some feasible advice to both the company and the industry.The contribution of this essay is to help enterprise have a better understanding to the influence of exchange rate.Specifically,it uses the methodology of classical case and analysis from the prospective of how and in which way the exchange rate fluctuate impact the company.On the other hand,it proposes some feasible measurement to tackle the risk management and it is of great significance to the foreign trade enterprise's risk management.The drawback of this essay is that the analysis of how the exchange rate' risk impacts on the enterprise's finance is not thorough and strong.The primary reason is that it is constrained by the limited information revealed openly by the venture when analysis the case.