Analysis Of The Free Trade Zone Sme Foreign Exchange Risk Management

With the increasing globalization of the world, the changeable international foreign exchange market will impose exchange risk on the firms. How to manage firm's foreign exchange risk based on application of effective method and instrument, which is a practical issue. This essay focuses common methods for exchange risk management, and analyses the advantage and shortage for small firm's controlling exchange risk, and studies the strategies and methods of confirmation -measurement-control for small firm's exchange risk management with a R company case.Firstly, this essay explains the value of exchange risk management, analyses the characteristics for small form's exchange risk management, introduces exchange risk classification- characteristics and common methods for exchange risk management at home and abroad. Secondly, it further analyses the impact element of exchange risk management including the development tendency of international exchange rate market, the relevant laws and regulations, preferential exchange rate policy at the Free Trade Zone. Then this essay introduces the keys and the steps of exchange rate management, and the financial instrument working theory. With some cases, we know how to apply the tools as bank products such as future exchange, exchange option, exchange settlement and sales in future, swap. Then this essay analyses R company business characteristics and history data, and takes consideration of reality in import and export process, and advises of the strategies and methods for R Company's exchange risk managementFinally, this essay emphasizes the importance to manage exchange risk. To the present difficulty and deficiency of small firm's exchange risk management, it shows some opinions for controlling the exchange risk and provides small firms with some reference of measuring risk level, making strategies, choosing methods for controlling exchange risk.