Shanghai Putit Composite Material Co., Ltd.
Feasibility Analysis Report on Carrying Out Forward Foreign Exchange Settlement and Sales Business
I. Objectives and Necessity of Carrying Out Forward Foreign Exchange Settlement and Sales Business
With the advancement of RMB internationalization, currency exchange rate fluctuations have increased. To lock in the cost of current settlement and sales and mitigate the impact of exchange rate fluctuations on the company's operating results, the company's management has researched and decided to carry out forward foreign exchange settlement and sales business.
Forward foreign exchange settlement and sales is a foreign exchange hedging financial product approved by the People's Bank of China. The transaction principle is to sign a forward foreign exchange settlement and sales contract with a bank, agreeing on the currency, amount, exchange rate, and term for future settlement or sales of foreign currency. Upon maturity, when foreign exchange income or expenditure occurs, the settlement and sales business will be conducted according to the currency, amount, and exchange rate stipulated in the forward contract, thereby locking in the cost of current settlement and sales. In terms of specific operations, the company quotes prices to customers based on the forward settlement rate and signs forward settlement contracts with banks based on the forecast of foreign currency remittances, thereby locking in the company's exchange rate risk.
II. Basic Situation of Carrying Out Forward Foreign Exchange Settlement and Sales Business