Risk refers to the possibility of economic loss caused by changes in the delivery and settlement of foreign creditor’s rights and debts by enterprises or individuals.
China has become an important part of the global market system, but for most Chinese enterprises and residents, it is still a topic not mentioned much.
After the exchange rate reform in July 2005, with the gradual realization of a more flexible formation mechanism, the fluctuation of exchange rate has become increasingly large, and the risk accompanied by the fluctuating exchange rate has become a major issue that people have to pay attention to.
Trading risk that enterprises in the process of transaction settlement, due to the ratio of foreign currency and local currency change risk of loss, in other words, when enterprises for foreign trade transactions, generally denominated in foreign currency transaction, the transaction process, due to the change of lead to reduce local currency cash flow from real or actual loss as a result of the increase in the number of local currency cash payment.
This risk is mainly generated in the process of business activities of the enterprise, the specific accounts of the performance of foreign currency denominated outstanding receivable or payable, advance or advance, futures trading, forward acceptance bills, international investment and international lending and so on.
As is known to all, time is one of the components of foreign exchange risk. In the process of international trade, whether spot payment or deferred payment is adopted, there will be a period during which the exchange rate is constantly changing, thus bringing settlement risks to traders [2].
For example, a trading company exported $100000 worth of goods, exchange rate for us $1 = 7. When the contract signing, the exporter shall, in accordance with the contract price can receive 730000 yuan RMB, because want to after a month to receive payment for goods, if payment currency is us $1 = 7.2 yuan, so the exporter received $100000 can only be converted into RMB 720000,
I lost 10,000 yuan without realizing it.
Chinese accounting regulations stipulate that Chinese enterprises need to adopt local currency to conduct business accounting on their operating conditions and financial contents during a period of time.
Translation risk refers to the risk that foreign trade enterprises face in the process of converting foreign currency creditor’s rights and debts into local currency when accounting statements are processed.
In the process of translation, due to the different evaluation situation of assets and liabilities in different periods, resulting in different profits and losses, and the change level of exchange rate is not the same, so there will be certain evaluation risks in the process of accounting.
, for example, as a foreign trade company, my company in early December 2014 to buy a device, the value of $100000 (including taxes), us $1 = 7.2 yuan at this time, my company accounts payable is 720000 yuan RMB, the end of December 2014 issued by the financial statements, the exchange rate of us $1 = 7.3 yuan, asset values reflect in the report for 730000,
That’s $10,000 more than it was worth when it was bought.
This is the over-valuation risk caused by the difference between the exchange rate at the time of translation and the exchange rate at the time of purchase.
Economic risk refers to the risk that the future earnings of an enterprise may change due to the unpredictability of exchange rate in the process of operation.
Economic risk is only the expected assessment of the possible risks in the future, is a process of foreign trade enterprises to carry out the overall market planning, but also the embodiment of enterprise forecasting ability, the accuracy of the forecast results will directly affect the enterprise production, sales, market development and financing and other strategic decisions.
Foreign exchange trading risk is generated in the process of foreign exchange buying and selling, which is the risk of speculation in the foreign exchange market, through exchange rate fluctuations to earn profit.
This risk is the most important risk of enterprises engaged in foreign exchange trading.
In order to meet the needs of foreign currency balance and payment, foreign trade enterprises will reserve a certain amount of foreign exchange. During the holding period of foreign exchange reserve, if the exchange rate changes and the value of foreign exchange reserve is lost, the foreign exchange reserve risk will be formed.
In order to avoid this risk effectively, foreign trade enterprises should adjust the structure at any time according to the exchange rate change and payment demand, and reduce the loss of enterprises to a minimum.
