Report on the Feasibility Analysis of Conducting Foreign Exchange Hedging Business
The company's export business primarily uses USD and EUR for settlement. Therefore, significant exchange rate fluctuations can have a substantial impact on the company's operating performance. To effectively hedge against foreign exchange market risks and enhance financial stability, the company (including its consolidated subsidiaries) plans to conduct transactions with financial institutions qualified to engage in foreign exchange hedging business, with a cumulative limit not exceeding USD 50 million (or its equivalent in other foreign currencies). The company's foreign exchange hedging must be based on normal production and business operations, with the primary objective of hedging and preventing exchange rate risks. It must be aligned with the company's actual business and must not affect normal production and business operations, nor be used for speculative foreign exchange transactions.
Overview of Foreign Exchange Hedging Business
(I) Main Currencies and Business Types Involved
The company's foreign exchange hedging business is limited to currencies identical to the main settlement currencies used in the company's production and business operations. The main foreign currencies involved include USD and EUR. The types of foreign exchange hedging business include, but are not limited to, forward foreign exchange purchases/sales, foreign exchange swaps, foreign exchange options, interest rate swaps, interest rate options, and related combination products.