For foreign exchange trading risks, we should adhere to three principles:
Principle of comprehensive concern: Foreign-related economic entities should attach great importance to foreign exchange risks in their own economic activities, comprehensively use various analytical methods, comprehensively and systematically investigate the existence of various risk events, risk factors and the severity of probability losses caused by risks, and provide more complete decision-making information in a timely and accurate manner.
Principle of diversification: The business scope and management style of each economic entity are different, and each economic entity should find the foreign exchange risk tactics and specific management methods that are most suitable for its own risk situation and management needs. In fact, no foreign exchange risk management method can completely eliminate foreign exchange risk. Therefore, when choosing a risk management method, it is necessary to comprehensively consider many factors such as enterprise development strategy, foreign exchange management policy, risk position scale and structure, and it is not appropriate to adopt only one risk management method for a long time.
The principle of maximizing income is to pursue the maximum income at the lowest cost under the premise of ensuring the realization of risk management objectives. This is the starting point and the end result of risk management, so economic subjects must choose the method with the best effect and the lowest cost according to the actual situation and their own financial affordability.
The most commonly used management methods to avoid risks:
Strengthen account management and actively adjust assets and liabilities. Assets and liabilities expressed in foreign currencies are easily affected by exchange rate fluctuations. Asset-liability adjustment is to rearrange or convert these accounts into currencies that are most likely to maintain their own value or even increase their value.
Choose a favorable pricing currency and use soft currency flexibly. Foreign exchange risk is closely related to foreign currency. The foreign exchange risk is different in different currencies of receipt and payment. In principle, we should strive to collect foreign exchange in hard currency and pay foreign exchange in soft currency.
There are many kinds of currency hedging clauses in the contract, and there is no fixed model. However, no matter which hedging method is adopted, as long as both parties agree and can achieve the purpose of hedging, currency hedging methods mainly include gold hedging, hard currency hedging and a basket of currencies hedging, and most contracts use hard currency hedging clauses.
Share the risk through agreement. Both parties to the transaction can determine the basic price and exchange rate of the product according to the signed agreement, determine the range of exchange rate change and the proportion of exchange rate change risk shared by both parties, and adjust the basic price of the product through consultation as appropriate.
Grasp the time of receipt and payment flexibly according to the actual situation. In the ever-changing international foreign exchange market, the income of economic entities is different if the payment is made in advance or postponed. We should be good at grasping the opportunity and flexibly grasp the payment and receipt time according to the actual situation.