Foreign exchange exposure analysis is a method to measure the impact of exchange rate changes on the current earnings of banks. Foreign exchange exposure mainly comes from currency mismatch between off-balance sheet and off-balance sheet business of banks. When a bank's long position in a certain currency is inconsistent with its short position in a certain period of time, the resulting difference forms foreign exchange exposure. In the case of foreign exchange exposure, exchange rate changes may bring losses to the current income or economic value of banks, thus forming exchange rate risks.

When analyzing the risk exposure, we should analyze the foreign exchange risk exposure of a single currency, and the total amount of foreign exchange risk exposure formed by converting the risk exposure of each currency into the reporting currency and adding up and offsetting it.

The analysis of foreign exchange exposure is an early exchange rate risk measurement method adopted by the banking industry, which has the advantages of simple calculation and clear understanding. However, the analysis of foreign exchange exposure also has some limitations, mainly ignoring the correlation of exchange rate changes of various currencies, and it is difficult to reveal the exchange rate risks brought about by the correlation of exchange rate changes of various currencies.