Foreign Exchange Risk Management Of Multinational Companies

After world war ii with the trade promotion and capital liberalization, actualizing methods of management became the various countries' big enterprise inevitably choice, Chinese companies are also involved in the foreign exchange change and risk management have more understanding. And in 1973 after the collapse of the bretton woods system, nations adopt floating rate system, has a far-reaching influence of transnational enterprises.International financial management is the emerging field in the modern financial management science system, and transnational corporation financial management is the important part in this science system. In the concept frame of multinational corporation financial management, managing exchange rate risk is the outstanding characteristic and significant content, especially first chapter to be researched. That is because that financing, inventing and operating of transnational company are concerned with managing exchange rate risk.In the foreword of this essay, the purpose, research method and writing frame and background are introduced, especially with the overall review of different theories in the management of exchange rate risk, concept of exchange rate risk , and risk management etc. In the first part of this essay, basic concept and definition of transnational company is indicated, including how fluctuation of exchange risk influences the transnational company. The part also illuminates how transnational company takes basic measures to manage exchange risk in three aspects. Aims, principles and strategies are introduced in detail in this part, so that we can construct a management system at the base of theories above. The second part is the core and important part in this essay. This part focuses on construction of exchange rate risk management system comprised of identification, computation and evasion. In this part identification, computation and evasion of exchange rate risk will be respectively introduced in detail. The third part mainly introduces that after the issue of the new China accounting standard, the enterprise have new guideline to manage the exchange rate risk. In this party, two practical examples prove validity of the management system. The forth part is the last part of the essay. This part analyzes the present situation of exchange rate manage by china enterprises. In this part, the author also provides some suggestions of managing the exchange rate risk, and discusses the prospects on the feasibility of managing the exchange rate risk by the enterprises in China.Therefore, strengthening the Chinese enterprise to foreign exchange risk, establish a rational understanding of foreign exchange risk management mechanism and enhance exchange risk management ability is imperative. This article through to multinational companies the depth of foreign exchange risk management for Chinese enterprises, foreign exchange risk management provides is worth reference management system, to our country enterprise foreign exchange risk management gave advice.