The Research On The Risk Management Of Foreign Currency Debt Of Highway Construction Units

After entering the WTO, the construction unit of the highway is the same as other enterprises with foreign currency operation or foreign currency debts, facing the enormous exchange risk, to the construction unit of the highway particularly it is interest rate risks and exchange rate risks of the loan in foreign currency. The time limit of loan in foreign currency of construction unit of the highway is long, the amount of money is large. The units build the highway in RMB and the money to pay back to the foreign banks comes from the revenue in RMB. It makes the units face the enormous exchange rate risk unavoidably under current exchange rate system. The exchange rate risk that the construction unit of the highway faces is shown as the trade risk mainly. The risk is the change of the receivable assets'and the payable debts'value. To the construction units of the highway, it is shown to pay more money in RMB to pay back to the foreign banks. Meanwhile, a lot of loan in foreign currency in floating interest rate may suffer enormous lost in a situation that the market interest rate is changeable. This paper analyses the necessity and the feasibility of risk management of the loan in foreign currency to the construction units of highway. That is combined with the actual conditions of Hunan Province. The paper compares and analyses several kinds of risk management methods, such as monetary swap, interest swap, foreign exchange options etc.. These kinds of methods are all suitable for the risk management of the long-term loan, but every method gives up the chance of income while locking the risk. The paper recommends the different method of risk management to the different periods of cash flow. At present the risk management just starts in the construction units of highway, and it still await to strengthen again in such aspects as talents store, the methods of risk management ect..