The two-way fluctuation of the RMB exchange rate has become the norm, and the level of corporate exchange rate risk management continues to improve——

Stick to the concept of exchange rate risk neutrality

  Our reporter Yao Jin and Chen Guojing

  Since the beginning of this year, the two-way fluctuations in the exchange rate of the RMB against the US dollar have become more pronounced.

From the perspective of the central parity of the renminbi against the US dollar, the year-to-date trend has generally shown a trend from rising to depreciation, then from depreciation to rising, and then depreciating again.

In an environment of two-way exchange rate fluctuations, how to manage exchange rate risks has an important impact on the financial performance of companies, especially those with active international businesses.

  What is the current corporate awareness of foreign exchange risk management?

What are the misunderstandings or weaknesses?

Has the corporate exchange rate risk management requirements been effectively met?

How to look at future exchange rate trends?

The Economic Daily reporter interviewed industry insiders and experts.

Positive changes in exchange rate hedging awareness

  "Our company has been operating globally since the 1990s. Currently, our business covers more than 160 countries and regions, involving 26 currencies for receipt and payment. We always adhere to the concept of'exchange risk neutrality' and incorporate exchange rate risk Daily operation and management, as far as possible to reduce the impact of exchange rate fluctuations on the uncertainty of the main business." said the relevant person in charge of TCL Group Finance Co., Ltd.

  The reporter learned from the State Administration of Foreign Exchange that with the continuous advancement of exchange rate market-oriented reforms, the level of exchange rate risk management of Chinese enterprises has also been continuously improved.

The data shows that as the People's Bank of China and the Foreign Exchange Administration have increased the promotion and guidance of "exchange rate risk neutrality", Chinese enterprises have undergone positive changes in their awareness of exchange rate risk aversion.

The hedge ratio in 2020 is 17.1%, an increase of 2.7 percentage points from 2019, and this year has continued to maintain a growth trend.

  But at the same time, we must also note that some companies still have "procyclical" and "streaking" behaviors in foreign exchange risk management.

Some companies have relatively weak exchange rate risk management awareness, and even some companies do not engage in any exchange rate hedging; the procyclical financial operations of companies accumulate risk exposure through currency mismatches of assets and liabilities, earn the benefits of exchange rate appreciation and depreciation, and will inevitably bear the exchange rate. The risk of appreciation and devaluation.

  In this regard, the person in charge of the relevant department of the foreign exchange bureau suggested that companies should establish a correct awareness of "exchange rate risk neutrality" and establish a sound exchange rate risk management system.

One is to understand the unpredictable exchange rate, to understand the general trend of market-oriented reforms with two-way fluctuations in the RMB exchange rate and increasing flexibility; the other is to base itself on the main business, to rationally face the rise and fall of exchange rates, and to prudently arrange the currency structure of assets and liabilities; and the third is to establish a sound currency structure. Its own exchange rate risk management system and mechanism take multiple measures to manage exchange rate risk reasonably; the fourth is to maintain the stability and sustainability of the financial situation as the orientation, and not to hedge the profit and loss of the hero.

  "The trend of renminbi volatility is obviously stronger than that of the US dollar index. In other words, the foreign exchange market is more likely to form a trend trading strategy of the renminbi exchange rate, which may result in gambling-style transactions that tend to be long or short. The risk of the RMB exchange rate deviating from the equilibrium exchange rate for a longer period of time.” Wang Jinbin, executive deputy secretary of the Party Committee of the School of Economics of Renmin University of China and researcher of the National Institute of Development and Strategy, believes that the People’s Bank of Reduce pure exchange rate trend transactions, and emphasize the purpose of exchange rate serving the development of the real economy.

Take multiple measures to cope with exchange rate risks

  Reducing corporate exchange rate risks requires the joint efforts of companies, banks, and regulatory authorities.

Among them, the service quality of the bank's foreign exchange derivatives is directly related to the market vitality and development level of the foreign exchange market.

The person in charge of the relevant department of the foreign exchange bureau said that banks should focus on the following aspects to provide services for corporate exchange rate hedging:

  First of all, help companies establish a sense of "exchange rate risk neutrality".

This is the prerequisite for carrying out exchange rate hedging behavior.

Companies should be guided to realize that if they do not take the initiative to manage risk, exchange rate fluctuations will affect the stability of production and operation, and even cause loss of profits; trying to make extra profits by guessing the direction of exchange rates may bring greater operational and financial consequences. Hidden dangers.

  Second, guide companies to establish and improve exchange rate hedging systems.

Due to the imperfect system of some companies, there is a phenomenon of "want to use but not, afraid to use, or not good" exchange rate hedging tools.

Helping companies establish a good system and let them realize the importance of exchange rate hedging through practice is far more than doing one or two hedging business.

  Third, strengthen the bank's basic foreign exchange business capacity building.

Foreign exchange hedging is highly professional and has a long personnel training cycle. Many banks have strong self-operating and market-making capabilities at the head office, but weak branches in the customer exhibition business. It is difficult for the grassroots to provide enterprises with specialization, refinement, and customization. An optimized exchange rate hedging program.

But for most companies, the bank's basic service capabilities are crucial.

Therefore, banks need to start cultivating professional teams in branches to provide enterprises with "butler-style" exchange rate hedging services.

  "The continuous development of China's foreign exchange market can effectively meet the needs of corporate exchange rate risk management." The above-mentioned person in charge stated that since the reform of the RMB exchange rate system in 1994, the foreign exchange bureau has actively promoted the development of the domestic foreign exchange derivatives market, continuously enriched trading tools, expanded participating entities, and optimized Infrastructure to enhance transaction convenience.

  Specifically, first, the foreign exchange derivatives market has basically equipped with internationally mature products, and currently covers mainstream trading varieties such as spot, forward, foreign exchange swaps, currency swaps and ordinary European options.

Second, participating banks in the foreign exchange derivatives market cover all parts of the country and various banks. As of the end of 2020, 115 domestic banks have qualified for foreign exchange derivatives for customers, including large, medium and small, medium and foreign banks, with services covering all parts of the country. There are basically no blanks.

The third is the continuous improvement of foreign exchange derivatives trading mechanisms, enriching exchange rate risk management scenarios, and adapting to market demand.

In 2020, the transaction scale of my country's foreign exchange market is about 30 trillion U.S. dollars, which is an increase of 22 times compared with the 2005 exchange rate reform, of which 60% are foreign exchange derivatives transactions.

  "In the next step, the SAFE will continue to actively promote and support enterprises to manage exchange rate risks, including establishing a sound, open and competitive foreign exchange market; promoting financial institutions to enrich risk-hedging products, reducing the cost of corporate hedging and hedging, and improving market transparency. , To facilitate market entities to rationally judge the situation of the foreign exchange market; strengthen macro-prudential management and expected guidance, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.” The person in charge said.

The RMB exchange rate is stable and supported

  On the whole, the RMB exchange rate is expected to be stable this year, and the flexibility of two-way floating has increased, which has played the role of a macroeconomic stabilizer.

In the future, the exchange rate trend will still attract the attention of the market.

  Changes in the RMB exchange rate are affected by multiple internal and external factors.

my country's economy is stable and improving, the monetary policy is in a state of normalization, the international balance of payments is operating steadily, and the foreign exchange market is more mature. These factors will continue to provide strong support for the stability of the RMB exchange rate.

  "Exchange rate is a relative price, and its future trend changes will be affected by domestic and foreign factors. Factors such as domestic and foreign economic situation, international balance of payments and foreign exchange market changes determine the trend of the RMB exchange rate." said Lou Feipeng, a researcher at China Postal Savings Bank. Looking forward to the future trend of the RMB exchange rate, there are both supporting and restraining factors, and the two-way fluctuation of the RMB exchange rate will become the norm.

  China Everbright Bank analyst Zhou Maohua also believes that from a comprehensive perspective of various factors, the renminbi exchange rate does not have a substantial depreciation or appreciation basis in the short term.

The renminbi exchange rate is expected to continue to operate near a reasonable equilibrium level, with two-way fluctuations normalized, and the renminbi's trend will rise and fall. This is also the inevitable result of the market-oriented reform of the exchange rate.

For market entities, the biggest risk lies in betting on the "unilateral" trend of the renminbi.

  Zhou Maohua said that the domestic epidemic prevention and control and economic recovery have performed outstandingly in the world. The effects of the domestic deepening of reform and opening up continue to be released, the economic structure is continuously optimized, the macro risks tend to converge, the international balance of payments is basically balanced, and the RMB exchange rate flexibility has increased significantly. The foundation for the "stability" of the RMB exchange rate is solid.