Our Country Commercial Bank Foreign Exchange Risk Management Research

The late70s of the20thcentury, as The Bretton Woods System collapsed, theglobal economical and financial environment were more and more liberalized. Manycountries turned to financial deregulation, thus the exchange risk was greater.Throughout the development of exchange rate system, China has experiencedmanagement floating system, pegged to the dollar, pegged to a basket of currencies,double-track pricing system during the planned economy and the managementfloating system based on dollar. On July21th2005, China began to implement amarket-based, with reference to a basket of currencies, managed floating exchangerate system. With the fluctuation of the rate, on the one hand, it has broughtopportunities to the commercial banks, on the other hand, frequent and moresignificant exchange rate fluctuations also exposure to risk which has brought agreater challenge to the management of commercial banks’ exchange rate risk.Along with the reforming of the exchange rate system and the opening up of thefinancial system, the exchange rate risk becomes an important topic that both thedomestic and overseas focus on. Nowadays, the appreciation of exchange rate is moreand more obviously. If poor management, the commercial banks would faced the riskof bankruptcy, even the chaos of the whole financial system. Therefore, strengthen theexchange rate risk management is imperative.Based on the system economics, management and mathematical statistics relatedtheory and related software, and on the basis of the optimization and the improvementof the risk prevention mechanism, and full consideration of the present condition andprimal problem, the author put forward the suitable for commercial banks’ preventionmechanism of exchange risk under the premise of advanced experience. The authorproposes the related measure and management for the prevention of exchange risk inaddition.