Purpose of carrying out forward settlement and sale of foreign exchange
Because the company's export business accounts for a large proportion, it mainly uses US dollars for settlement, so when the exchange rate fluctuates greatly, exchange gains and losses will have a great impact on the company's operating performance. In order to reduce the impact of exchange rate fluctuations on the company's profits, maintain a stable profit level and focus on production and operation, the company plans to carry out forward foreign exchange settlement and sale business with banks. Forward settlement and sale of foreign exchange is a foreign exchange hedging financial product approved by the People's Bank of China.
Risk of exchange rate fluctuation: in the case of great changes in the exchange rate market, the quotation of the bank for forward settlement may be lower than that of the company for customers, which makes it impossible for the company to lock in the quotation for customers, resulting in exchange losses.