Foreign exchange hedging transaction is a foreign currency transaction based on the physical transaction of goods or capital, which is the same as the monetary amount, term and currency in the physical transaction of goods or capital. However, hedging and risk aversion are not the same concept, and hedging is to bear another kind of risk that is completely negatively related to the real thing that needs hedging.

Classic case study:

Toyota Motor Corporation of Japan exported and sold 65,438+0,000 vehicles to the United States, and signed a semi-annual delivery payment contract with the amount of 65,438+0,000 million dollars in March.

The exchange rate of USD/JPY was 1: 108.00 in March and 1: 107.00 in September.

Analysis: According to the foreign exchange quotation in March, Toyota Company of Japan can recover:1000 *108 =10.8 million yen.

However, when payment is made in September, only1000 *107 =10.7 million yen can be recovered.

Estimated loss:108000-107000 =100000 yen.

However, Toyota hedged the foreign exchange market with100,000 USD as follows: (ignoring interest and handling fees)

Toyota has been in the foreign exchange market since the date of signing the contract in March.

USD/JPY = 1: 108.00 Sell 100 lots of foreign exchange contracts (sell USD against JPY).

And buy and close the position at the current market exchange rate on the delivery date of the car in September.

If the closing price is 1: 107.00, then:

(108.00-107.00)/108.00 *100000 *100 = 92592.59 USD.

Converted into Japanese yen, it is 6,543,800 yuan.

Results:

In spot trade: due to the fluctuation of exchange rate, the enterprise lost 6,543,800,000 yen.

In the foreign exchange market, the hedging profit of enterprises is 6,543,800,000 yen.

Break-even successfully avoided the market risk in the transaction and successfully hedged it.