Investment institutions hold US stocks, and their profits and losses are calculated in US dollars. To sum up, the investment institutions in the example have certain profitability in the stock market. Assuming online trading, it is predicted that a US stock will make a profit of $654.38+million at the close. At this time, there is no risk in the rise of the exchange rate of the US dollar against the RMB. If the exchange rate of US dollar against RMB falls, there will be some losses. In other words, it is equivalent to holding more than $654.38+million in the foreign exchange market. If you hedge the risks, you can hold the equivalent empty dollar bills in the foreign exchange market.

Summary: Predicting the profit margin of US stock investment and holding the equivalent dollar short bills in the foreign exchange market can hedge the risks caused by the fluctuation of the exchange rate between the US dollar and RMB.

After thinking about it, there are still many details in actual operation. First of all, it is difficult to accurately predict the earnings of US stocks, which is a difficult point. In addition, as RMB is not a freely convertible currency, as far as I know, only domestic banks can conduct relevant transactions if they want to hold RMB empty bills in the foreign exchange market.

All the above are theoretical suggestions, and no actual corresponding operation has been done, for reference only!

I hope my answer is helpful to you. Welcome to ask questions and hope to adopt them!