Analysis For Foreign Exchange Risk Control Of Chinese Company

Chinese company is weak with controlling currency risk and loses money from it.This report states the importance of foreign exchange risk control and some general methods.Foreign currency risk comes from transaction risk, economic risk and translation risk. Risk control strategy includes all-compensate, part-compensate and no-compensate strategy. The principle is analysis and risk-least.The company can choose different currency, adjust price and swap exchange rate. So the company can close the currency exposures.Foreign exchange risk management can work before and after risk-producing. Some methods can avoid time risk or currency exposures. Some methods can do both.Forward contracts, BSI and LSI are useful tools in management of account receivable.Japanese,Europe and American company accumulate many success experience. We should learn from them.At last ,this report analyze the case about ZHANG ZE POWER CO.LTD.It challenged the risk of foreign loans. The reduced some risk by hedging with currency swaps.