What is the security of foreign exchange financing?

Broadly speaking, foreign exchange investment and financial management is one of the ways of investment and financial management. Simply put, foreign exchange investment is the exchange of one country's currency for another, which is called foreign exchange. That is, the relationship between countries caused by economic exchanges such as trade, investment and tourism. The foreign exchange market is the largest financial market in the world. There are transactions in the foreign exchange market almost all day, and the transaction volume is huge, which is estimated to be around one trillion dollars every day. This scale is larger than the total transaction volume of all stock markets in the world. The foreign exchange market is not concentrated and belongs to over-the-counter transactions. Buyers and sellers contact each other through real-time communication tools such as telephone, computer and fax machine.

Foreign exchange financing is risky, and it is a 24-hour uninterrupted transaction. The most important thing is that the fishing rod principle brings high risks and high returns, and the mastery is not a big problem.

Extended data:

Foreign exchange insurance:

Foreign exchange insurance, also known as no foreign exchange insurance. It refers to the risk that the investor's principal, profits and other legitimate income cannot be freely converted into foreign currency and remitted back to China due to the shortage of foreign exchange in the host country, the restriction or suspension of foreign exchange trading, or the inability to conduct foreign exchange trading due to other unexpected events such as war.

If you want to apply for foreign exchange insurance, then the laws of the host country cannot prohibit exchange when the applicant signs an insurance contract with an insurance institution. In other words, when the insured signs an insurance contract, the investor's investment income and other income can be exchanged and transferred. Because if the host country has clearly stipulated the prohibition when signing the insurance contract, the insured will bear the prohibited losses and cannot claim compensation from the insurance company. Therefore, prohibited risks must occur at least after signing the insurance contract.

When we buy foreign exchange insurance, the local currency obtained by the insured as investment income or profit during the insurance period, or the local currency obtained by selling the property of the investment enterprise, can be guaranteed by insurance. Because if the host country prohibits the conversion of these currencies into free currencies during the insurance period, these currencies can be converted into free currencies through overseas private investment insurance institutions.

The role of foreign exchange reserves:

Foreign exchange reserves are foreign exchange assets held by central banks and other government agencies in various countries and can be converted into foreign currencies at any time to meet the needs of international payment. The functions of foreign exchange reserves are:

1. Adjust the balance of international payments and ensure the ability to pay abroad.

The US dollar is the main trade tool in the world, and some foreign trade enterprises need to exchange foreign currencies. Storing foreign exchange reserves can make these enterprises "have money to exchange".

2. Intervene in the foreign exchange market and stabilize the local currency exchange rate.

For example, if the renminbi depreciates, it is necessary to sell the renminbi and store dollars; When the RMB appreciates, it is necessary to sell dollars and stabilize the RMB price through policy intervention.

3. Maintain the international reputation of RMB and improve its external financing ability.

Through Article 2, only by stabilizing the domestic exchange rate can the international reputation of RMB be improved and the ability of external financing be improved.

4. Enhance comprehensive national strength and ability to resist risks.

Storing a certain amount of foreign exchange reserves plays an important role in the development of a country's international trade and can improve its comprehensive national strength.