Locking foreign exchange is locking the exchange rate. In banks, this business is called forward settlement and sale of foreign exchange. In the case of frequent exchange rate fluctuations, banks handle the operation of locking the exchange rate for enterprises. On the day of settlement of foreign exchange, it is not according to the foreign exchange quotation of the day, but according to the previously determined exchange rate.
The original purpose of foreign exchange locking is not to earn the exchange rate difference or gamble that the exchange rate will fall, but to prevent the huge losses that may be caused to export companies because of the exchange rate decline and ensure the effective implementation of the contract. Generally, long-term settlement of foreign exchange is done when the amount involved is relatively large, the contract time is relatively long and the exchange rate trend is very unstable.