The Study On Exchange Rate Risk Management Of TJ Electric Tools Co.,Ltd

Since the reform and opening up,with the continuous improvement of China's international status in the world and the impact of world economic integration,RMB has developed rapidly in the international arena.However,after the economic crisis,in order to promote the process of economic recovery,the major economies of the world have adopted policies such as announcing gradual withdrawal from QE and reducing the scale of debt purchase,which have increased the uncertainty of exchange rate.At the same time,due to the political crisis in some countries,the risk of exchange rate fluctuation has been strengthened,which has a greater impact on the economic activities of various countries.As the world's largest trade importer and exporter,China has adopted various preferential policies towards import and export enterprises in recent years.The total trade volume has been rising continuously,but the impact of exchange rate fluctuations on China's foreign trade economy has also increased further.Moreover,after the "811" exchange rate reform,the two-way broad-band characteristics of RMB have been further expanded,which brings greater challenges and risks to the scientific and effective management of exchange rate risks in the operation of import and export foreign trade enterprises.Especially,the exchange rate risks caused by small and medium-sized foreign trade enterprises are increasing day by day,and profits of some enterprises with weaker risk resistance have been sharply reduced.Loss or even bankruptcy.Therefore,it is urgent to carry out exchange rate risk management.This paper combines the relevant research at home and abroad and thestudy of exchange rate risk management theory.Taking TJ Electric Tools Co.,Ltd.(hereinafter referred to as TJ Company)as the research object,firstly,it introduces the relevant background and operation status of the company.Based on the analysis of actual cases,it specifically puts forward the existing problems of TJ Company in exchange rate risk management,such as weak sense of active hedging,single settlement currency,bargaining power.The weakness and insufficient use of hedging methods and other issues;secondly,the causes of corporate management problems were investigated and interviewed,and it was concluded that the main factors affecting exchange rate hedging of TJ Company were internal and external factors.Finally,according to the causes of the problem,the specific implementable risk response strategies and safeguard mechanisms are put forward: Firstly,the company can adopt hedging and business restructuring strategies to reduce the losses caused by the current risks;Secondly,the company should clearly define its business objectives,adhere to the correct exchange rate risk management concept as the basis,through the construction of a scientific foreign exchange risk prevention mechanism,improve enterprise financial management.Means,strengthen the relevant personnel management to improve internal management.Thirdly,for external factors,it is suggested that banks,as the main risk aversion channel,should enhance publicity and product innovation ability to provide more suitable products for small and medium-sized foreign trade enterprises to avoid risks;local governments should strengthen guidance and financial support to enable local financial units to play their advantages,serve the local import and export industry economy to the greatest extent,and reduce the financing difficulties of import and export enterprises.In order to create a good foreign trade environment for the county,we should adopt external safeguard mechanism.This paper holds that although small and medium-sized foreign trade enterprises in China can solve the short-term exchange rate risk problem by some means,they can only cope with it for a while.The author finds that although this kind of exchange rate risk can not be completely eliminated,through reasonablecontrol and scientific means of hedging,the impact of risk on enterprises can be reduced to a controllable range.Therefore,this paper suggests that small and medium-sized foreign trade enterprises should take solving the fundamental problem as the starting point,and carry out scientific and effective management of exchange rate risk in the course of the company's operation is the long-term strategy for the stable development of the company.