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What foreign exchange risk management tools are available in the financial market?
Foreign exchange risk management tools in financial markets are as follows:

1, forward foreign exchange transactions

Forward foreign exchange transaction refers to the foreign exchange transaction in which the buyer and the seller do not make delivery immediately after the transaction, but make delivery on the agreed date in the future according to the agreed period, currency, quantity, exchange rate and other factors on the transaction date.

2. Foreign exchange futures

At present, the most active trading places for overseas RMB futures are Hong Kong Stock Exchange and Singapore Stock Exchange. Overseas RMB futures contract is a standardized product of the exchange, which belongs to a kind of on-site trading. Compared with forward, overseas RMB futures contracts have three characteristics, namely, high price transparency, low counterparty risk and gathering global participants.

3. Non-deliverable forward foreign exchange transactions

NDF (non-deliverable forward), that is, non-deliverable forward foreign exchange trading, belongs to one of the forward foreign exchange trading modes. NDF is usually applicable to the currencies of countries and regions that implement foreign exchange control, and is generally traded through offshore OTC markets.

4. Foreign exchange options

Foreign exchange option usually refers to a contract in which both parties agree that the buyer of a transaction contract has the right to buy and sell foreign exchange currency from the seller of the contract at an agreed execution price and transaction amount at a certain time in the future by paying the option fee.

The trading varieties of RMB foreign exchange options include RMB and different foreign currencies such as USD, JPY, EUR, GBP and HKD. Generally speaking, the currency of the option fee is RMB. RMB foreign exchange options can be divided into foreign exchange call options and foreign exchange put options, and domestic foreign exchange options are common European options.

Tips: The above information is for reference only.

Reply time: 2021-12-16. Please refer to the latest business changes announced by Ping An Bank in official website.