This year, as the Federal Reserve has begun cutting interest rates, the dollar/renminbi exchange rate has continued to weaken, increasing pressure on export-oriented companies with dollar-denominated receivables.
Meanwhile, currencies like the euro and pound have rebounded against the dollar, creating significant exchange rate volatility risks for enterprises involved in foreign exchange transactions. As a result, businesses are finding it more difficult to secure operating profits, posing a challenge to their financial stability.
To address these challenges, Guiyang Free Trade Zone (FTZ) has prioritized improving access to foreign exchange services. It has partnered with financial institutions to promote renminbi-denominated foreign exchange financial products, assisting export-oriented enterprises in navigating international currency fluctuations and supporting the steady growth of foreign trade.
Guizhou Saboman Import & Export Co, a key mineral exporter in the zone with core markets in North America and Europe, is particularly vulnerable to dollar fluctuations. After identifying the company's needs, Guiyang FTZ conducted a comprehensive evaluation and facilitated a connection between the enterprise and financial institutions, encouraging them to offer renminbi-based foreign exchange derivative products.
The Cross-Border Finance Department of China Merchants Bank Guiyang Branch, along with its business team, visited the company. After analyzing its trade model and identifying pain points, the bank leveraged its "zero-cost option" program for export-oriented firms to design a tailored hedging solution. This involved purchasing dollar put options to lock in a favorable exchange rate, effectively mitigating dollar depreciation risks.
With its cost efficiency, simplicity, and reliable returns, the solution has provided strong support for the company as it navigates international economic shifts and bolsters its confidence in expanding global markets.