Exchange rate risk includes the following:

Exchange rate risk converted from transaction exchange rate risk is economic exchange rate risk.

the so-called exchange rate risk refers to the economic losses that may be brought to the debtor due to the fluctuation of the exchange rate of the borrowing currency during the period from signing the contract to repayment. Suppose a debtor borrows a debt of $1 million, because its repayment source (export proceeds) is Hong Kong dollars. When borrowing, one dollar is exchanged for 7? 6 Hong Kong dollars, when the debt is due to repay the loan, due to fluctuations in the international market exchange rate, 1 dollar can be exchanged for 7? 8 Hong Kong dollars. Excluding interest, the debtor has to pay an extra HK$ 2, to repay the debt principal of US$ 1 million.

This HK$ 2, is the loss brought to the debtor by exchange rate risk. Of course, exchange rate fluctuations may also bring exchange rate gains to debtors. However, there are many unpredictable factors in the international market, and debtors should try their best to avoid exchange rate risks.

interest rates are mainly divided into fixed interest rates and floating interest rates. Generally, the fixed interest rate can lock the interest payment in advance, so the risk is small, but the financing cost may be high. The floating interest rate is more flexible, but there are many uncertainties, so the risk is also great.

As a foreign borrower, we should control and prevent foreign debt risks from the following aspects:

First, pay attention to the choice of foreign debt currency. Generally speaking, the choice of foreign debt currency should be consistent with the import and export settlement currency as far as possible. Unless the exchange rate trend is predicted and analyzed with confidence, the foreign debts in the same currency should be selected as much as possible to avoid exchange rate losses caused by exchange rate changes in different currencies.

At the same time, foreign debt contracts should be signed in currencies with strong liquidity, such as US dollar, Japanese yen and Hong Kong dollar. In case of exchange rate risk, currency swap and other means can be adopted in time to transfer the risk.

second, make a good exchange rate forecast and choose a soft and hard currency mix. Try to borrow hard currency and return soft currency as much as possible. When borrowing, choose "hard currency" with rising currency value, and when repaying, choose "soft currency" with falling currency value. In this way, the amount of borrowed foreign debt funds can be guaranteed to a certain extent, and the benefits can be brought into play as much as possible; In repayment, due to the decline in the exchange rate of debt currency, it is possible to reduce the cost of debt repayment.

third, arrange the interest rate structure reasonably. Interest rate is the main component of the total cost of debt. For the debt interest rate, fundraisers should not only consider the current interest rate level of debt currency, but also consider the change and trend of debt interest rate; We should not only consider the current debt interest rate level, but also consider the balance of the overall debt interest rate structure.