Research On The Strategy Of Foreign Trade Enterprises To Evade Exchange Rate Risk

In order to make the exchange rate system in line with international standards and further improve the international competitiveness of foreign trade enterprises, China introduced a shift in exchange rate on July 21,2005, from "fixed exchange rate, double track exchange rate" to "float rate", from "unified management" to "Market regulation", from "single peg to the dollar" to "the reference to a basket of currencies".Since the exchange rate reform, the RMB exchange rate formation mechanism is more flexible.The international competitiveness of China’s foreign trade enterprises and the ability to resist risk is greatly increased, the structure of foreign investment and further improve the quality, China’s opening to the outside world is greatly improved. On June 19,2010, the central bank announced to further promote the reform of the RMB exchange rate formation mechanism for exchange rate flexibility. This decision has triggered a new round of the appreciation of the RMB.And because the United States in recent years, a lot of fiscal deficit and trade deficit, lead to the RMB rising against the dollar, it was not until 2014 that the RMB exchange rate movements appeared the trend of the ups and downs, the RMB exchange rate against the dollar depreciated by 0.36% throughout the year. Therefore the formation mechanism of the RMB exchange rate has become more flexible. After the exchange rate changes, the RMB exchange rate has achieved a two-way fluctuation, the fluctuation range is obviously enhanced. We can reflect the market supply and demand better. At the same time, under the background of economic globalization, RMB exchange rate volatility increase, China’s foreign trade enterprises in the face of the exchange rate risk is gradually increasing. Especially in recent years,the international bulk commodity price fluctuation amplitude increase affected by the global financial crisis and subprime crisis in the United States. Many of China’s foreign trade enterprises originally profit is very weak, coupled with the impact of these external unfavorable factors. The foreign trade enterprises how to actively and rational use of diversified financial portfolio of tools to avoid the exchange rate risk, fixed costs and profits, reduce the adverse impact of exchange rate volatility on the generated, and benefit from exchange rate fluctuations in the process, is an important topic of the enterprise survival and the development of the relationship between foreign trade.Through an analysis and summary of the related research and theories of foreign trade enterprises and exchange rate risk, this paper analyzes exchange rate system and the development of foreign trade in different periods in China, and compares the exchange rate risk under different exchange rate system. In the fourth part, this paper analyzes the impacts of exchange rate risk on foreign trade enterprises, and explains reasons behind. In conclusion, this paper provide suggestions on how foreign trade enterprises can evade exchange rate risk, namely, strategies of evading trading risk, reduce risk and economic risk.