Research on Exchange Rate Risk Management in Corporate Foreign Currency Debt Financing: A Case Study of Evergrande Group

Abstract

Amid China’s ongoing reform and opening-up, the scale of foreign currency debt financing among Chinese enterprises has expanded steadily. In this context, firms face two core challenges: mitigating exchange rate risks via financial markets and managing foreign currency debt effectively. Taking Evergrande Group as a case, this paper systematically examines the exchange rate risk management framework for foreign currency debt financing and identifies key risk exposures in the process. Based on an analysis of Evergrande’s current status of foreign currency debt financing, practical risk management measures, and existing deficiencies, this study proposes targeted optimization strategies. Findings indicate that strengthening the exchange rate risk management system, optimizing hedging instruments, and improving performance evaluation mechanisms have significantly reduced Evergrande’s exchange rate vulnerabilities. Finally, this study extracts lessons and best practices from the Evergrande case to summarize core principles of exchange rate risk management for enterprises relying on foreign currency liabilities. It provides actionable guidance for peer firms, helps small, medium, and micro enterprises (SMEs) enhance resilience against exchange rate volatility, and supports the sound and sustainable development of foreign currency debt financing activities in China.