Since the exchange rate system of RMB was reformed by People’s Bank of China on July 21,2005,our government has carried out the new floating exchange rate system that was based on supply and demand in the market. RMB is no longer single to peg to U.S. dollar, also according to one basket currency to adjust and manage the floating system.
Before the reform of exchange rate, the RMB against US dollar exchange rate basically kept on around 8.26yuan. Since our government began to carry out the managed floating exchange rate system, the RMB exchange rate against US dollar has continuously increasing in value. The exchange rate rose to 8.11yuan for the first time on July 22,2005 and made a great breakthrough to 8yuan on December 25,2005,and has appreciated to about 7.60yuan now. The appreciation of RMB would greatly reduce the prices of export and export volume of products, and bring greater export pressure to the export-oriented enterprises. After reading the content about the fact that the appreciation of RMB from some magazine, summed up a view that enterprises could utilize the foreign exchange transactions to relieve the pressure of increasing in value of RMB, to increase profits for themselves. The content summed up as follows, for everybody to understand and consult.
First, enterprises can advance or delay the settlement of foreign exchange. Second, enterprises can use financial instruments to avoid foreign exchange risks. Through some measures to reduce the risk of exchange rate fluctuations, such as, long-term foreign exchange transaction of RMB, long-term foreign exchange trading, foreign currency option, swap transaction, bill purchased and structural deposit and so on. The domestic financial institutions all offer this kind of business at present. As far as I know, RHB Bank has business items that provide a long-term settlement of exchange rate and foreign currency swap transaction.
No matter carry on the long-term foreign exchange transaction of RMB or handle the immediate foreign currency account settlement business, all of enterprises should pay attention to select the suitable trade opportunity. Because of the prescription of People’s Bank of China, banks can adjust the US dollar listed price in the range of price difference as regulation on the some day. One day has one kind of price turned to be many kinds of price. In a word, according to the trend of foreign exchange, export-oriented enterprises can confirm the trade opportunity, try hard to reduce the exchange losses that made by fluctuations of foreign exchange.
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