Research On The Management Of Exchange Rate Risk In Foreign Construction Enterprise

Over the past 40 years of reform and opening-up,with the acceleration of global integration and Chinese economic strength improving,more and more construction enterprises join to the "going out" force,many construction companies are also include.As the main business form for Chinese construction enterprises to participate in international economic activities,the market share of Chinese foreign contracted engineering business is also constantly improved.For the reason of these "going out" construction enterprises are overseas,this paper defines the qualification of Chinese foreign contracting project as foreign-related construction enterprises.After General Secretary Xi put forward the "One Belt And One Road" initiative in September 2013,the pace of China’s outbound investment has been further accelerated.In the first half of 2019,Chinese companies and countries along the One Belt And One Road belt and road signed new contracts for foreign projects worth us $63.64 billion,growth up33.2% over the same period last year.Due to the characteristics of large contract amount and long payment collection period,exchange rate risk has gradually become one of the key risk factors to be considered by Chinese foreign-related construction enterprises.On July 21,2005,China carried out the exchange rate reform,and the RMB exchange rate began to implement a managed floating exchange rate system.On that day,the RMB exchange rate appreciated by2.1%..This makes many foreign construction enterprises began to realize the impact of exchange rate fluctuations.Especially since 2018,the impact of China-United states trade war and the global economic downturn,RMB exchange rate fluctuations have become more frequent.In the first half of 2019,the RMB exchange rate rose to 6.70 and then fell to nearly 7.20 in August,The two-way fluctuation of the RMB exchange rate is becoming more obvious.How to effectively control the exchange rate risk in foreign contracted projects has become a difficult problem facing many foreign construction enterprises.On the basis of summarizing relevant exchange rate risk theories,this paper combines the operation characteristics and development status of Chinese foreign contracted project business,taking A company as a case,by integrating the company’s financial data from 2012 to 2018,it is found that the fluctuation of RMB exchange rate will have an impact on the company’s exchange gains and losses,financial expenses,operating profit,cash flow and other data,and then affect the company’s overseas investment and other business activities.By analyzes the current situation of exchange rate risk control of A company,this paper proposes measures to improve the exchange rate risk management and control,and hopes to provide some suggestions for the exchange rate risk management of Foreign-related construction enterprises.