Cover News:

Supporting enterprises in managing exchange rate risks has been a key task of the SAFE in recent years. May I ask about the current situation of enterprises' exchange rate risk management? What policy approaches are there for further helping enterprises manage exchange rate risks? Thank you.

Li Bin:

Thank you for your questions. I'll take these. In recent years, with increased volatility in the international financial market, enterprises' demand for proactively identifying and managing exchange rate risks in cross-border trade and investment has risen. The SAFE has continuously improved its services for enterprises' exchange rate risk management, and has made efforts in the following aspects. First, it has promoted the risk neutral concept regarding exchange rates through various means. We have compiled and issued the guidelines for corporate exchange rate risk management and the case collection on exchange rate risk scenarios and foreign exchange derivatives, and opened a special column on corporate exchange rate risk management services on the SAFE website, actively promoting good experiences and practices in exchange rate risk management. Second, we have promoted the establishment and improvement of a long-term mechanism for exchange rate risk management services by financial institutions. Currently, more than 120 banks of various types have launched foreign exchange derivatives businesses, the online trading mechanism is constantly being improved, and the business development capabilities at the grassroots level have been continuously strengthened. Third, we have improved the service capabilities of foreign exchange market infrastructure, reduced the transaction and settlement costs of foreign exchange derivatives for micro, small and medium-sized enterprises, expanded the transaction and settlement periods of foreign exchange derivatives, and guided financial institutions to continuously optimize exchange rate hedging products and provide more convenient services.

We have observed that an increasing number of enterprises are incorporating exchange rate fluctuations into their day-to-day financial decision-making and managing exchange rate risks through various means, including foreign exchange derivatives, local-currency settlement, and operational natural hedging. Enterprises' awareness of and capacity for exchange rate risk management continue to improve. Looking at the data over the past five years, in 2025, the volume of foreign exchange derivatives used by companies to manage exchange rate risk exceeded $1.9 trillion, nearly doubling from 2020. As I mentioned earlier, the corporate foreign exchange hedging ratio stood at 30%, up 8 percentage points from 2020.

Going forward, we will work with relevant parties to further enhance exchange rate risk hedging services for enterprises, enabling them to better focus on their core business and guard against risks. First, we will continue to strengthen the promotion of the concept of exchange rate risk neutrality, so that enterprises with hedging needs are more willing to conduct hedging operations. Second, foreign exchange authorities, the foreign exchange market self-regulatory mechanism, and banks will continue to publish case studies. This gives enterprises useful references in identifying exchange rate risk exposures and formulating hedging strategies, helping them hedge more effectively. Third, we will guide financial institutions to establish and improve long-term mechanisms for providing exchange rate risk hedging services to enterprises. This includes expanding the range of hedging products to cover more currencies, developing simple and user-friendly exchange rate hedging instruments, and improving foreign exchange risk management services. These efforts will enhance enterprises' capacity to hedge. Just now, Mr. Zou also announced a number of measures to further support enterprise exchange rate hedging. Fourth, we will support compliant and trustworthy enterprises in conducting foreign exchange derivatives transactions more conveniently. We will streamline business procedures and enable enterprises to hedge more effectively. That is all for my response. Thank you.