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Home>Treasury&Markets>FX Risk Management>Foreign Currency/CNY Exchange
Foreign Currency/CNY Exchange

Spot

Product Features:
Spot foreign currency /CNY exchange means that bank offers currency exchange between major foreign currency and CNY, according to the quoted FX rate and clients’ instruction.

For Example:
For one Client need to sell USD/ buy CNY regularly, even the fluctuation of USD/CNY rate in daytime may influence its profit margin. So the client will give a call to bank to get information about the latest market information, and then make dealing instructions on their own judgment.

Forward

Product Features:
Forward foreign currency /CNY exchange means that bank offers forward exchange contract to clients for whom to be able to get transfer between foreign currency and CNY at a certain FX rate in the future. And both parties must implement the contract at the delivery day.

Main Risk:
If exchange rate goes in the reverse direction, the clients may lose the chance to get a better FX rate because of the fixed exchange rate in the contract.

For Example:
One corporate has 10million USD revenue half a year later. Now the USD/CNY rate is around 8.0900, the client makes a contract with the bank to sell the USD at 7.900 in half a year in case of the loss from CNY appreciation. The client has a fixed FX rate to avoid the USD/CNY rate risk.