Export enterprises are greatly affected.
Xiao Chen, who is engaged in foreign trade logistics, has been very upset recently. Because he has a lot of dollars as a business settlement tool, he is worried about the change of exchange rate almost every day. Seeing the rapid depreciation of the dollar, he panicked. He said that if the exchange rate reaches about 6.5%, small foreign trade enterprises like him may be on the verge of bankruptcy, and he hopes to get through this smoothly.
As usual, Mr. Wu, who is engaged in luggage import and export business in Shanghai, is also running a bank for RMB appreciation these days. Since his company is expected to receive a payment of USD 400,000 by the end of June, if the RMB exchange rate appreciated by more than 1.5 percentage points before, a rough calculation of exchange rate adjustment may cost Mr. Wu at least tens of thousands of yuan.
The accelerated change of exchange rate makes people nervous, especially for export-oriented enterprises. With the accelerated appreciation of the RMB and the accelerated depreciation of the US dollar, some foreign trade enterprises are in an awkward position.
Use exchange rate hedging instruments
Relevant experts said that before the exchange rate reform, the RMB exchange rate was relatively stable for a long time, and enterprises had a weak concept of avoiding exchange rate risks and insufficient understanding of exchange rate hedging tools, which limited their use of hedging products.
On the one hand, enterprises lack professional knowledge and talents. Under the traditional business philosophy, the financial personnel of some enterprises are insensitive to the international financial market dynamics and know little about various financial derivatives, which affects the use of exchange rate hedging tools.
On the other hand, some enterprises, especially some state-owned enterprises, have a weak awareness of exchange rate hedging for a long time, and their business philosophy has not completely changed. They often blame exchange rate risks on policy factors and lack active awareness of hedging.
Experts pointed out that in order to effectively cope with the possible export changes caused by RMB appreciation, powerful enterprises can avoid exchange rate risks by establishing their own brands, establishing production bases overseas and other long-term development strategies. Most export-oriented enterprises might as well take some technical exchanges to "save themselves". At present, the main means of exchange rate hedging that enterprises can use are: trade financing, changing the way of trade settlement, raising the price of export products, switching to non-US dollar currency settlement, and increasing the proportion of domestic sales. The main financial products that enterprises can use include: forward contracts, loan hedging, swap hedging, balanced liabilities, foreign exchange options, factoring and so on. Flexible use of exchange rate hedging tools can reduce the adverse impact of RMB appreciation on exports to a certain extent.
For example, there are not a few enterprises that do import and export business of luggage like Mr. Wu without any foreign exchange preservation. For import and export enterprises, because the currency, term and amount of income and expenditure do not match, the hidden exchange rate risk will directly lead to the uncertainty of payment cost, income accounting and financial forecast. Therefore, controlling exchange rate risk is the primary task for all kinds of enterprises with foreign exchange revenue and expenditure needs to achieve value preservation and profitability.
It is understood that with the appreciation of RMB and the improvement of the new exchange rate system, more and more export enterprises go to banks to consult forward settlement and other businesses, hoping to fix their financial costs through bank wealth management products. At present, commercial banks have launched forward foreign exchange settlement business to help enterprises avoid the exchange rate risk between foreign currency and RMB, and change the situation that enterprises have potential losses because they have not kept their value.
Beware of fluctuations in overseas interest rates.
In addition to the impact of RMB appreciation on enterprise benefits, the fluctuation of overseas interest rates is also one of the risks that enterprises need to face. For example, the interest rate of the US dollar has been rising while the Federal Reserve has continuously raised interest rates in the previous two years. Let many companies holding long-term dollar bonds face market risks. According to market practice, enterprises generally hold floating interest rate loans, and the corresponding basic index is often LIBOR interest rate in the international market. Once the US dollar raises interest rates, the LIBOR interest rate will also increase accordingly, which means that the loan cost of enterprises will also increase accordingly.
Banks have a variety of hedging tools for enterprises to choose from, and the common one is interest rate swap.
Through this transaction, the enterprise can change the original floating interest rate loan into a fixed interest rate loan, thus avoiding the possible increase in the loan cost of the US dollar in the process of raising interest rates. In addition, with the improvement of the international financial market, enterprises can add certain structural clauses to the basic interest rate swap transaction according to the actual situation and market judgment, so as to lock in the loan interest rate and reduce the financial cost.