The Application Of Financial Derivation In Foreign Currency Debt Risk Managerment

The scale and the speed of international capital flow are becoming larger and faster as the international economy is getting integrated and the finance is getting much freer, which undoubtedly brings more international financial risks to host countries. Such as interest rate risk, foreign exchange rate risk, etc. The key to avoiding or reducing financial risks is the right understanding of financial risks and using financial instruments to manage those risks.The thesis, whose objective is to address the issue of financial risks management of foreign currency debts with derivative instruments, systematically introdulces the interest rate risks and exchange rate risks our long-term debts faced, the volatility of international capital market, the basic derivative instruments used to manage financial risks. It sets forth the practical meaning of the research subject, and elaborates the strategies adopted in foreign currency debt risk management.For easily understood, the thesis researches some practical cases and gives several explanations, analyzes the conditions, profit-cost of the derivative products such as interest swap, currency swap, structured swap with option, introduces the right risk management methodologies of the enterprises with foreign debts. It can possibly inspire the further exploration on the foreign debts management of China's enterprises.Case analyses are not the major objective of this thesis. The paper attempts to draw some conclusions of universal significance through these discussions. On the one hand, the enterprises must understand the interest rate risks and exchange rate risks they faced, and take measures to manage those risks; on the other hand, risk management is a special field of study, it must be done after fully analyzing the market and the products. Therefore, it's the most important for the enterprises to understand and control the derivative products.In accordance with the debts risk management, the thesis makes some suggestion, focuses on the principle of debts risk management operator. It also points out the future extending directions of relative research territory.