Foreign exchange trading risk prevention measures and principles

Choosing a good valuation and settlement currency is one of the most common and basic ways for enterprises to avoid foreign exchange risks. The principles of enterprise valuation currency selection are: 1. Reasonably choose the valuation currency; 2. Use currency preservation clauses. In international financial marekt, there are both local and foreign currencies, as well as coins and soft currencies. In the process of transactions, enterprises choose the appropriate valuation currency, which is an important way to prevent foreign exchange risks. The choice of valuation currency should follow the following principles: (1) Follow the principle of "hard payment". (2) The principle of consistent import and export currencies. (3) The principle of consistent borrowing, use, receiving and returning currencies. (4) The trend of exchange rate and interest rate changes should be comprehensively considered. ( 5) The principle of using the local currency as the denomination currency.

Some methods commonly used in our country are as follows:

1. Properly choose the currency used in the transaction: ① In foreign economic transactions, if necessary and possible, the local currency can be used as the denomination and settlement currency. ② Under the condition that foreign currency transactions must be used, it is necessary to choose a currency that can be freely convertible on the international financial marekt, such as the US dollar, the Japanese yen, etc. ③ Among freely convertible currencies, there is also a difference between "soft" and "hard" within a certain period of time, that is, some are soft currencies that tend to depreciate, and some are hard currencies that tend to appreciate. When choosing the denomination currency for transactions, it should be the hard currency that earns foreign exchange to strive for appreciation, and the soft currency that spends foreign exchange to strive for depreciation. ④ Because in international economic transactions, the use of hard currency is beneficial to the recipient or creditor, but unfavorable to the payer or debtor; the use of soft currency is unfavorable to the recipient or creditor, but beneficial to the payer or debtor. Therefore, in the negotiation of foreign economic transactions, the two sides strive for the opposite goal. When the two sides are at a stalemate, they can make concessions to each other and adopt a combination of soft and hard currencies, with both parties sharing the risk.

2. Adopt the method of allocation and liquidation.

3. Adopt foreign exchange preservation clauses: There are two kinds of foreign exchange preservation clauses: ① When signing a trade contract, set the exchange rate, and pay according to the exchange rate stipulated in the contract regardless of any changes in the exchange rate in the future. ② When signing a trade contract, the payment exchange rate is uncertain, but it is stipulated that when the exchange rate changes, both parties bear half of the loss.

4. The result is denominated in a third country's currency or a "basket of currencies".

5. Use spot foreign exchange trading to prevent risks.

6. Use borrowing methods to safeguard against foreign exchange risks.

7. Use forward foreign exchange trading to prevent risks.

8. Use options trading to protect against foreign exchange risks.

9. Use swaps (hedging) to protect against foreign exchange risks.

10. Use "Forfaiting" business to prevent foreign exchange risk.

11. Advance or delay foreign exchange receipt and payment.

12. Participate in exchange rate fluctuation insurance: ① Debt decentralization management. ② Rational management of creditor's rights structure. ③ Corresponding management of creditor's rights and debts.