The impact of exchange rate on trade and exchange rate risk management
1. The impact of exchange rate on trade
Theoretically: The appreciation of the local currency is good for imports but not good for exports
Practice in the past few years: From a macro perspective, the appreciation of the RMB has not affected China’s exports. In 2004 , China’s exports of goods accounted for 6.44% of the world market, which increased to about 11% in 2012, and is expected to continue to increase this year; the appreciation has also promoted China’s industrial upgrading, especially in the export sector. According to relevant surveys at home and abroad, exchange rate factors The impact on exports ranks third after external demand and costs (tax included).
2. Exchange rate risk
Potential losses or gains caused by exchange rate fluctuations.
Three elements of exchange rate risk:
◆Domestic currency, foreign currency and time
◆As long as the three elements are combined, they will not form exchange rate risk
Exchange rate risk may cause losses – so it must be managed. It may also bring profits–so it can be used as a target or tool for investment profits
◆China COSCO’s third quarterly report shows that due to exchange rate changes, exchange losses from January to September were 13.3 billion yuan, while exchange gains in the same period last year were 4.65 billion yuan. 100 million yuan
◆TCL Group’s third quarter report showed that the company carried out fixed-income foreign exchange financial management business based on the due payment of goods in US dollars, and still lost about 38.76 million yuan in exchange.
3. Basic principles of busy rate risk management
As long as any one of the three elements of exchange rate risk is removed, exchange rate risk will not exist.
◆Local Currency Settlement my country has implemented cross-border RMB trade settlement since 2000 in order to reduce the exchange rate risk of foreign trade enterprises. Currently, RMB settlement accounts for about 10% of my country’s foreign trade settlement.
◆Complete foreign currencyization: Complete foreign currencyization, that is, there is no so-called currency rate problem, so there is no exchange rate risk.
◆ Time governance is limited to the same time from signing to execution; or, financial instruments such as spot, forward, swap, and option are used to fix costs or benefits in a timely manner.
If exchange rate risk is effectively managed, it may eliminate possible losses or lose profit opportunities. For foreign trade companies, there are other ways to manage exchange rate risk:
◆Short-term orders (The essence is also management time).
◆Incorporate Huizhang fluctuation price adjustment clause into the contract.
The main means: its products have certain monopoly advantages in the international market, so that all risks can be transferred through pricing, such as technical advantages, brand advantages, channel advantages, etc.
4. Hong Kong’s RMB NDF
NDF refers to non-delivery forward foreign exchange (Non-Delivery Forward). It is a forward foreign exchange transaction model used for those countries and countries that implement foreign exchange controls. Regional currencies for offshore trading Hong Kong RMB NDF is a forward transaction contract signed between Hong Kong banks and customers with USD/RMB as the underlying. The forward exchange rate, term and amount are determined in the contract, but upon maturity There is no actual principal delivery on the day, but netting payment is made based on the contract exchange rate and the official exchange rate on the maturity date, and the payment currency is US dollars.
Case:
If on December 7, 2012, the one-year RMB NDF price of a bank in Hong Kong was 6.3100/6.3140, a company in Hong Kong expected that the RMB would appreciate, so it signed a contract with the bank with a target amount of RMB 100 million. Yuan forward purchase contract.
–If the RMB exchange rate really appreciates by December 7, 2013, the official spot exchange rate of RMB against the US dollar is 6.0000/6.0020. From this calculation: 10003/6.0020-10900/6.3100=813,253 US dollars. The result is positive, that is, the bank pays US$813,253 to the customer – if the RMB depreciates by December 7, 2013, the official spot exchange rate of RMB against the US dollar is 6.4080/6.5020, calculated from this; 10000/6.5020-10000/ 63,100–$467,970, the result is negative, which means the bank charges $467,977 to the customer.
5. Use the difference between Hong Kong RMB NF and mainland RMB forward quotes to arbitrage. Some domestic companies are already involved in Hong Kong’s RMB NDF, and some companies use the difference in domestic and overseas forward quotes to obtain risk-free arbitrage.
◆Case
–If on December 7, 2012, the one-year USD/RMB quotation of a domestic commercial bank is 6.3376/6.3654, and the quotation of a Hong Kong bank is 6.3100/6.3300, the difference between them If there is a difference in the quotation, is there an arbitrage opportunity?
–Note: According to the principle of buying low and selling high (from a corporate perspective), under the direct pricing method, look at the difference between the buying price and the selling price (bank quotation) Is it positive? If it is positive, there is an arbitrage opportunity.
Based on this principle, it is found that 6.3376-6.3300=0.0076, which is greater than zero. There is an arbitrage opportunity for enterprises. The operation is as follows:
Sell US dollars to buy RMB in China, and sell RMB to buy US dollars in Hong Kong. . If the target amount is 10 million yuan, the company will calculate the domestic price based on the forward exchange rate of 6.5376 yuan/USD.The bank signed a forward exchange settlement of US$10 million for 12 months. In Hong Kong, the company’s Hong Kong company and the bank in Hong Kong purchased US$10 million of NDF for 12 months at a forward exchange rate of 6.3300 yuan/USD. Through this operation , the enterprise can obtain risk-free arbitrage of 1,000*(6.3376-6.3500)=76,000 yuan.
6. The basic principles of using RMB foreign exchange transactions to manage exchange rate risks are personal opinions
–When an enterprise is uncertain about the future trend of the RMB exchange rate, it can choose appropriate trading products to fix costs or lock in revenue:
–When an enterprise believes that the future trend of the RMB exchange rate is unfavorable to itself, it should choose corresponding foreign exchange trading products to avoid risks;
–When selecting products, choose simple and liquid trading varieties as much as possible, and give priority to long-term transactions. period, followed by swaps, and then options;
– For those who try to make profits through these foreign exchange trading tools, they must first make corresponding predictions or inferences about future exchange rates, and on this basis, choose the appropriate trading tools.
AAAVBJYTUJGHNH
