Risk management of exchange rate in forex trading case study of commercial banking system in ho chi minh city

MINISTRY OF EDUCATION MINISTRY OFAND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY UNIVERSITY OF NGÔ TRẦN KIẾN QUỐC RISK MANAGEMENT OF EXCHANGE RATE IN FOREX TRADING CASE STUDY OF COMMERCIAL BANKING SYSTEM IN HO CHI MINH CITY MASTER THESIS Faculty of Banking Ho Chi Minh City – 2010 2010 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY NGÔ TRẦN KIẾN QUỐC RISK MANAGEMENT OF EXCHANGE RATE IN FOREX TRADING CASE STUDY OF COMMERCIAL BANKING SYSTEM IN HO CHI MINH CITY MAJOR: BANKING AND FINANCE MAJOR CODE: 60.31.12 MASTER THESIS SUPERVISOR Associate Professor Ph.D TRẦN HUY HOÀNG Faculty of Banking Ho Chi Minh City 2010 RISK MANAGEMENT OF EXCHANGE RATE IN FOREX TRADING A CASE STUDY OF COMMERCIAL BANKING SYSTEM IN HO CHI MINH CITY Certificate……… ……………………………………….… ……………………………………………………………… …………i Acknowledgement……………………………… ………………………………………………………………….….…………i Abstract……….…………………………………………….…………………………………….…………………………….………… iii Table of contents…………… ………………………………………………………………….………….…….……………… iv List of tables……………………………….…………………….…………………………………….…………… …………………v List of graphs.………………………………………………………………………………………….…………….…….………….vi Abbreviations………….……………………………….…….………………………………………………………………………vii Chapter one: Introduction to the study…………………………………………………………………… 1.1 Rationale of the study…………………….……………………………………………………………………………… 1.2 Research problem……………………………………………………………………………………………… ………… 1.3.1.1 Research questions…………………………………………………………………………………………… 1.3.1.2 Research objectives…………………………………………………………………………… ………… 1.3 Justification for the study…………………….………………………………………………………… ………… 1.4 Research methodology……………… …………………………………………………………………… ………… 1.5 Research subject and scope of the study…………………………… ……………………… ……… 1.6 Significance of the study……………………… …………………………………………………………… ……….5 1.7 Structure of the study………………… ………………………………………………………………………………….6 1.8 Limitations of the study………………………………………………………………………………………………….7 1.9 Conclusions …………………………………………………………………………………………………………………………8 Chapter two: Literature review……………………………………………………………………………………9 2.1 Introduction to the foreign exchange market……………………………………………………….10 2.1.1 Overview of establishment & development of forex market…………………….10 2.1.2 The Viet Nam foreign exchange market (VINAFOREX)……………….………….14 2.2 Exchange rate and risk management of exchange rate….….……….………….………18 2.2.1 Definition of exchange rate…………………………………… ………………………….….……19 2.2.2 Classification of exchange rate.……………………………………………… ……………… 19 2.3 Types of foreign exchange transactions…………………………………………………………….….21 2.3.1 Spot transaction…………………………………………………………………….…………………………….21 2.3.2 Forward transaction…………………………………………………………….……………………….……21 2.3.3 Swap transaction…………………………………………………………………….……………………….…21 2.3.4 Future transaction…………………………………………………………………….………………….……22 2.3.5 Option transaction……………………………………………………………………………………………….22 2.4 Risk management of exchange rate…………………….………………… …… …………………… 23 2.4.1 Definition of risk management of exchange rate…… ………………………….23 2.4.2 Factors influence risk management of exchange rate……………………… 24 2.4.3 Identification of exchange rate risk…….… …………………………………………………26 2.4.4 Exchange rate risk analysis and measurement of banks…………………….28 2.4.5 Risk management of exchange rate with Long or short position in net exposure………………………………………………………………………… ……………………………………………… 29 2.4.6 Risk management of exchange rate with Long or Short position in net total exposure…………………………….…………………………………………………………… …………… 30 2.4.7 Classification of risks associated with foreign exchange operation.33 2.5 Legal foundations for spot transaction and derivative transaction ……………34 2.6 Conclusions……… …………………………………………………………………………………………………………….35 Chapter three: Research Methodology…………………………… …………………………….…….36 3.1 Introduction……………………………………………………………………………………………………………………….37 3.2 Research design …………………………………………………………………………………………………………… 38 3.3 Data collection………………………………………………………………………………………………………………….41 3.3.1 Document Collection…………………………………………….………………………………………… 42 3.3.2 Personal Interviews………………………………………………….……………………………………… 43 3.4 Data analysis…………………………………………………………………………………………………………………… 46 3.5 Conclusions……………………………………………………………………………………………………………………….48 Chapter four: The current situation of risk management of exchange rate in foreign currency trading operation of commercial banking system in Ho Chi Minh city………………………………………………………………………… …………………………………… ……50 4.1 Overview of commercial banking system in HCMC…………………………………………51 4.2 Overall assessment of money market and banking operations in HCMC…53 4.3 Overview of Forex operations of commercial banking system in HCMC.56 4.3.1 Foreign currency trading operation………………………………….…………….……….62 4.3.2 Experience of risk management of exchange rate from Vietnam Bank for Agriculture and rural development’s transaction exposure…… ……… 64 4.3.3 Treasury organization and relation ship with other departments…66 4.3.4 Fluctuations of exchange rate USD/VND during year from 2007 to 2009……………………………………………………………………………………………………………………………………… ……71 4.3.5 Factors affecting to risk management of exchange rate of commercial banking system in HCMC………………………………………………………………………….75 4.3.6 Current risk management of exchange rate of commercial banking system in HCMC…………………………………………………………………………………………………………………….76 4.4 The current application of derivative instruments for preventing exchange rate risk of commercial banking system in HCMC……………………………………………………80 4.4.1 Forward transactions……… …………………………………………………….……………………….80 4.4.1.1 The current application of forward contracts of commercial banking system in HCMC….…………………………………….………………………… ……………………………80 4.4.1.2 The current forward rate setting……………………………………………………………….82 4.4.1.3 Factors affecting to forward transactions of commercial banking system in HCMC………………….…………………………………………………………………………………………… 83 4.4.1.4 Conclusion…………….………………………………………………………….………………………………87 4.4.2 Currency option…………… ………………………………………….………………………… …………87 4.4.2.1 The current application of currency Option of commercial banking system in HCMC…………………………………………………………………………………… …………………………….87 4.4.2.2 Option premium………………………………………………………………………………………………88 4.4.2.3 Conclusion……………………………….……………………………………………………………………….90 4.5 The evaluation of outcome performance on risk management of exchange rate of commercial banking system in HCMC…………………………………………………………….90 4.5.1 Achievements………………………………………………………………………………………………………90 4.5.2 Shortcomings….……………………………………………………………………………………………………92 4.5.2.1 Shortcomings from SBV’s forex management policy………………………92 4.5.2.2 Shortcomings from commercial banking system in HCMC……………93 4.5.3 Causes…………….………………………………………………………………………………………………………96 4.5.3.1 From forex management policy of SBV……………….…………… ….………….96 - No flexibility of exchange rate policy of SBV………………………………….………… 97 - Objects participating interbank forex market is limited and less efficient intervention made by SBV ……………………………………………………………………………………… …… 98 - Situation of high inflation and trade deficit ………………………………… …………… 98 - Unsuitable regulation of forward rate setting… ……………………………………….98 - Lack of legal framework guiding for forward and option transactions 98 4.5.3.2 From commercial banking system in HCMC….….………………………………99 - Most of local commercial banks have not developed self-forex trading yet and rarely use derivative instruments for hedging risk of exchange rate 99 - Possibility of increasing legal capital of commercial banking system in HCMC is limited…………………………………………………………………………………………………………….………99 - In charge of combined responsibilities lead to lack of supervising and checking trading limits, loss limit and forex report to SBV ……………………………….10 - Depending on option premium of foreign banks……….……………………………101 4.5.4 Conclusions….………………………….…………………………………………………………………….….101 Chapter five: Recommendations and Conclusions……………………………………………103 5.1 Introduction…………….………………………………………………………………………………………………….….104 5.2 Recommendations for improvement of risk management of exchange rate of commercial banking system in HCMC……… ……………………………………………………… 104 5.2.1 Suggestions for State bank of Viet Nam……………………………………………………104 5.2.1.1 Improvement of spot market……………………………………………….……………… 104 5.2.1.2 Strengthening regulation on forex position……………………………………….105 5.2.1.3 Adjusting regulation to forward rate setting………………………………………106 5.2.1.4 Establishment of option interbank market ……………………………………….107 5.2.2 Recommendations for commercial banking system in HCMC………….107 5.2.2.1 Building business strategies and customer policy.………………………….107 5.2.2.2 Standardizing structure and process of operational Treasury…….108 5.2.2.3 Improvement of modern equipments and information technologies for treasury operation……………… …………………………………… …………………….…………………………109 5.2.2.4 Enhancing for training banking staffs to improve ability of analyzing and forecasting fluctuations of exchange rate in forex operation…109 5.2.2.5 Diversifying types of foreign currencies in the international trade………………………………………………………………………………………………………………………………………… 109 5.2.2.6 Strengthening the application of derivative instruments for hedging risk of exchange rate…………………………………………………………………………………………110 5.3 Conclusions related to research questions………………………………………………………….110 5.4 Implication for further study…………………………………………………………………………………….112 References ………………………………… viii Appendices ix Survey results… ……………………………………………………………………………………………………………………… x ABSTRACT Viet Nam has emerged as a rapidly growing economy in the last few years with the average growth rate of over 7% per year in which the banking system has developed strongly and efficiently and play a crucial role as connection between domestic and international financial market However with internal economic difficulties caused by high inflation, trade deficit and issues of government policy and unfavorable changes in the world economy, the banks, especially small and medium banks, have found obstacles on the way to develop due to lack of management experience and approaching new information technologies in banking field The thesis examines a case study of Commercial Banking System in Ho Chi Minh City to see the way they manage their risk of exchange rate and how strong financial instruments are used to prevent risk of exchange rate Objectives of the thesis are (1) to gain an understanding of risk management of exchange rate in theory; (2) to approach the recent method of risk management of exchange rate in foreign currency trading operation of commercial banking system in HCMC and the real application of derivative instruments for preventing risk of exchange rate of commercial banking system in HCMC from 2007 to 2009; (3) to figure out practical issues to be solved in risk management of exchange rate in foreign currency trading operation; (4) to suggest some recommendations for improving risk management of exchange rate of commercial banking system in HCMC In term of structure, the thesis has five chapters and begins by defining the research problem which can be clarified by research questions and research objectives By using survey method in combination with sources of secondary data of commercial banking system in HCMC for 2007 to 2009, the research problems of risk management of exchange rate in foreign currency trading operation of commercial banking system in HCMC have been explored and highlighted by pointing out factors affecting to the current method of risk management of exchange rate of CBS-HCMC Some practical issues of risk management of exchange rate of commercial banking system in HCMC are pointed out in which achievements, shortcomings and causes are investigated in order to raise some recommendations for improvement of risk management of exchange rate in foreign currency trading operations of commercial banking system in HCMC in particular The research study focus on risk management of exchange rate in foreign currency trading operation of commercial banking system in HCMC by controlling forex position and using solutions for preventing risk of exchange rate on many types of forex transactions which include spot, forward, swap and option transactions Based on literature review, recent foreign exchange regulations issued by State bank of Viet Nam and current situation of risk management of exchange rate of CBS-HCMC, the research study hope for contributing some general and specific recommendations for commercial banking system in HCMC as well as practical forex market of Viet Nam in long run THESIS RESULTS AND NEW POINTS 1/ The thesis provided interesting assessments on Vinaforex and forex trading markets among commercial banking system in Ho Chi Minh city 2/ The thesis looked at one of heatly-debated topics with a different focus on the risk originated from the forex trading operation and the ways of management of such risk 3/ The study target is meaningful, both academically and practically 4/ The thesis has covered a wide range of outstanding practical issues in the area of foreign exchange risk and risk management in Viet Nam 5/ The thesis adds at least 02 importance contributions to the literature as follows: - The thesis has reflected a number of perceptions on foreign exchange risk and risk management from senior level of related authorities and bankers - The thesis has furnished evidence of the importance of the management of foreign exchange risk (Bank for agriculture and rural development of Viet Nam; Bank for foreign trade of Viet Nam’s experiences) 6/ The thesis also focus on the application of derivative instruments for hedging risk of exchange rate in forex trading by adjusting regulations to forward rate setting The new points of forward rate setting as suggested are as follows: + Based on interest rates of deposit and loan of commercial banks, forward rate are consistent with real condition of market and narrow the difference between forward rate and spot rate at the same duration + Buying and selling forward rate are defined specifically making commercial banks comfortable to deal with customers and check it again CERTIFICATE I, Ngo Tran Kien Quoc, assure that all contents and figures in this research due to my study, survey and performance Ngo Tran Kien Quoc REFERENCES Documents, Reports and Websites Website reference: - Website of Ministry of Finance: http://www.mof.gov.vn - Website of State bank of Viet Nam: http://www.sbv.gov.vn - Website of Asia Joint stock commercial bank: http//www.acb.com.vn Periodical reports: - General reports of SBV-HCMC branch for year 2007, 2008 and 2009 - Reports of forex management of SBV-HCMC branch for year 2007, 2008 and 2009 - Forex reports of ACB, VCB-HCMC, Sacombank, Viet A bank, Southernbank, HDB, UOB and VID Public bank - Annual reports of SBV for year 2007, 2008 and 2009 Documents: - Programs-Targets and itinerary of banking service development for periods from 2006 to 2010 - Strategy of Banking service development for periods from 2010 to 2020 - Balance sheets of commercial banking system for year 2007 - 2009 Vietnamese materials: - International payment – Dr Tram Thi Xuan Huong; Vice Prof Dr Nguyen Dan Don; Vice Prof Dr Tran Huy Hoang; Ms Nguyen Quoc Anh; Lecturer Nguyen Thanh Phong – University of economics Ho Chi Minh City – Labour & Society publisher in 2008 - Foreign exchange market and solutions for hedging riks - Dr Nguyen Minh Kieu – Lecturer University of economics Ho Chi Minh City and Fulbright program - Statistical publisher in 2008 - Improvement of solutions for hedging exchange risk to prepare for integration of regions and world - Dr Nguyen Minh Kieu – Lecturer University of economics Ho Chi Minh City and science and technology department - scientific study in 2006 - Foreign exchange management in Viet Nam – Dr Le Quoc Lich Statistical publisher in 2004 Magazines: - Methods to determine the exchange rate risk of commercial banks – Ms Dinh Thi Thanh Long and Ms Phan Tien Nam – Banking review of June, 2010 - Risk management of exchange rate of commercial banks – Nguyen Thi Thu Thao – Banking review of April, 2010 - The use of Option – Master Dao Gia Hung – Banking review of August, 2008 - Some of renovation of exchange rate management in Viet Nam – Dr Le Phan Dieu Thao – Banking & Technology review of October, 2009 Foreign documents: - Options, Futures and other Derivatives – John C.Hull & Maple Financial Group Professor of Derivatives and Risk Managers; Director, Bonham Center for Finance; Joseph L Rotman School of Management University of Toronto – Sixth edition by Perrson Prentice hall - Risk management by Mr Guy Mertens – Financial technology Transfer Agency – January, 2010 - Yin R K (2003) Case study research Sage Publications, Third Edition Zikmund, W G (1997) Business Research Methodology Fort Worth, TX: TheDryden Press SURVEY RESULTS SURVEY RESULTS Some issues of risk management of exchange rate in fore trading of commercial banking system in Ho Chi Minh City I Survey targets: - To collect specific contents to confirm that the analysis and evaluations of the study are objective and reality - To survey recommendations to convince whether the research study base on both literature review and reality to apply or not II Survey objectives: Survey contents referring ideas from those people: - Leaders of State bank of Viet Nam-HCMC branch - CEO, Managers of Treasury of commercial banks in HCMC - Lecturers of banking university and economic university of HCMC III Research Method: - To bring out an overall assessment of the current situations of risk management of exchange rate as well as several specific issues to be solved for improving risk management of exchange rate based on characteristics and types of commercial banks in HCMC - In each survey questionnaires, interviewees can choose one or multiple choices based on his/her appreciation or raise personal opinions related to concerned problems IV Results of survey: What you think about the current situation of foreign exchange operation of CBS- HCMC? Content Unbalanced demand and supply of foreign currency Result (%) 15% Profit from foreign exchange operation still gains low 5% ratio compared with profit of credit operation Spot transactions accounts for more than 90% of total 5% fore turnover to primarily meet the requirements of customers’ international payment Derivative transactions are less in use but mainly arise in 3% foreign bank branches Most of local banks have not developed self-fore trading 2% yet All of them 70% 87 Other issues Why commercial banks have to conduct risk management of exchange rate? Content Result (%) To protect commercial banks from serious losses or 11% unexpected damages in foreign exchange operation To prepare for disadvantageous changes of exchange rate 3% towards foreign exchange operations of CBS-HCMC To regulate the sensitive market movements towards 7% foreign exchange operation To reduce the risk of exchange rate and catch the 4% business opportunities To strengthen the competitive advantage 5% All of them 70% Other issues What are the factors affecting risk management of exchange rate in FX trading of CBS-HCMC? Content Result (%) Supply and demand of foreign currency, especially USD 30% in the foreign exchange market Market sentiment (activities of USD cash market, 4% speculation, sentimental state of investors) Macro and micro economic (CPI, GDP, interest rate) 11% SBV’ s monetary management policy 10% All of them 45% How can commercial banks identify, measure and control damages or losses of exchange rate ? 4.1 How to measure risk of exchange rate on FX trading of CBS in HCMC Account balance of buying and selling spot and forward 10% turnover in balance sheet at the ending day of the month from both enterprises and interbank market Account balance of buying and selling from other 8% sources of foreign currency in balance sheet (FDI, FII and oversea remittances) Account balance of commitment of buying and selling 12% spot and forward transactions off balance sheet at the ending day of the month All of them: 60% Other issues 4.2 How to identify risk of exchange rate on FX trading of CBS in HCMC Content Result (%) All open positions are marked-to-market against 30% determined closing rate by supporting system to realize profit or loss at the end of day Long or short positions are exceeded over +/-30% of 4% bank’s own legal capital Dealers’ trading limits should not exceed the assigned trading desk limits as approved by ALCO There are excesses of stop loss limit and V.A.R 11% monitored by treasury settlement belonging to back office Dealers can only transact in products that have been 10% approved by ALCO and within the parameters stated for their trading limits All of them 45% 4.3 How to hedge risk of exchange rate on FX trading of CBS in HCMC Content Result (%) Basically squaring open position by buying or selling 50% spot transactions through interbank market or enterprises Buying or selling forward or option transactions for 8% preventing risk of exchange rate Keeping open position to caught opportunities 10% Other issues: Bank managers’ behaviors towards risk of 2% exchange rate (Who are risk averse, neutral or risk prefer) All of them 30% What are achievements as well as strong points of the current method of risk management of exchange rate of CBS-HCMC? Content Result (%) To mitigate the risk of exchange rate in FX trading 13% To create a considerable forex profit for banking 7% activities To combine between forex products and other banking 5% products in hedging risk of exchange rate To exchange more management experiences between 6% commercial banks on identification, measurement and control of exchange rate risk Using derivative instruments for hedging risk of 69% exchange rate creates more channels for CBS in HCM to buy or sell foreign currency in FX trading and more solutions to protect commercial banks from serious damages or losses All of them What are shortcomings as well as weak points of risk management of exchange rate of CBS-HCMC? 6.1 From SBV’s opinions Content Result (%) The official exchange rate between USD and VND has 5% not reflected the real value of VND and under direction of SBV daily The Interbank foreign exchange market working less 10% efficient, commercial bank find difficult to balance supply and demand of foreign currency for their FX trading Activities of USD cash market and situation of economic 4% Dollarization affecting sentiment state of holding USD Unsuitable regulation of setting forward rate due to the 10%% choosing basic interest rates of VND and USD that are not consistent with real interest rate of commercial banks Not enough legal framework guiding for forward and 5% option transactions All of them 66% Other issues 6.2 From commercial banks’ opinions Not enough qualified banking staffs and experiences of 12% risk management on treasury operation Lack of source of foreign capital in FX trading and improving modern equipments and 5% Information technologies for treasury operation Unbalanced supply and demand of foreign currency 7% Forward transactions are considered as a channel for 10% CBS-HCMC to buy foreign currency from export companies to make up for the lack of supply of foreign currency more than for hedging risk of exchange rate Unreasonable option premium 4% Most of commercial banks have no self-trading as 2% speculation All of them 60% What are the main reasons that cause the failure in risk management of exchange rate in foreign currency trading operation of CBS-HCMC that you experienced? 7.1 Causes from forex management policy of SBV SBV’s daily official exchange rate bases on turnover of 10% Interbank foreign exchange market which only make up about 20% of total forex turnover The exchange rate policy of SBV is still suffered from intervention made by SBV and does not reflect the real value of VND The Interbank foreign exchange market is working less 5% efficient Activities of trading USD cash in the black market 7% Unsuitable regulation of forward rate setting based on 5% the basic interest rate of VND issued by SBV and USD issued by FED which are not consistent with real interest rate of commercial banks Not enough legal framework guiding for forward and 10% option transactions All of them 55% Other issues 7.2 Causes from commercial banks in HCMC Content Result (%) Not enough qualified banking staffs and experiences on 8% risk management of exchange rate in operational treasury Shortage of modern equipments and information technologies for analyzing and estimating 7% market movements Weakness in risk management of exchange rate 15% - Not separating management responsibilities between supervising and checking transactions as well as specific task between treasury manager and chief of forex trading and fund management - Exceeding the regulation of forex position (30%/total own capital of commercial bank) - Violating reporting regulation on forex position to SBV - Not stipulated specific trading limits and stop loss limits on international interbank market - Less using derivative instruments for hedging risk of exchange rate Unreasonable option premium 5% All of them 65% Other issues What are general and specific solutions for CBS-HCMC for improving risk management of exchange rate? Content Result (%) Building business strategies and customer targets 5% Standardizing structure of operational Treasury: 15% - Separating the specific tasks from Front office, Middle office and Back office - Revaluation of positions: All open position belonging to the FX trading are marked-to-market against determined closing rates - Setting Trading limits and Stop loss limits - Transacting in authorized products Modern equipments and information technologies for 8% analyzing and estimating market movements Training banking staffs qualified for foreign exchange 5% operation All of them 67% Other issues: What are the recommendations for improving forex regulations of SBV Content Improvement of interbank foreign exchange market by: Result (%) 15% - Expanding object participating in interbank forex market including commercial banks and non bank credit institution - Decreasing step by step administration intervention made by SBV - Improving SBV’ ability of forecasting fluctuations of exchange rate and analyzing market trends Strengthening regulation on forex position and 7% expanding forex position ratio more than +/-30% Adjusting regulation to forward rate setting based on 10% interest rate of deposit and loan of commercial banks Establishment of option interbank market 5% All of them 63% Other issues V Evaluation of survey results: 1- Every different opinions chosen have represented specific contents in conformity with foreign exchange operation of each commercial banks in HCMC 2- Most ideas of banking experts agreed 100% about questionnaires arising from the current situation of risk management of exchange rate in FX trading, advantages or disadvantages of recent methods of risk management of exchange rate, how to identify, measure and control risk of exchange rate Last but not least, recommendations suggested for SBV and CBS in HCMC for improving risk management of exchange rate However, a number of specific contents is most unanimous as follows: + Forex management policy of SBV still have a lot of shortcomings such as interventions made by SBV to daily spot rate, method of setting forward rate, legal frame work guiding CBS in HCMC to conduct derivative instruments for hedging risk of exchange rate, the Interbank foreign exchange market working less efficient so that commercial bank find difficult to balance supply and demand of foreign currency for their FX trading: 75% - 85% + Main factors like supply and demand of USD, Marco and micro economy (CPI, Interest rate, GDP), Market sentiment (activities of USD cash market, sentimental state of investors) influence risk management of exchange rate of CBS in HCMC : 70% + Problems involved in non-qualified staffs, modern equipments and information technology: 50% + Treasury operational process are not standardized and separated tasks and responsibilities between front office, middle office and back office : 40% 50% RESEARCH PROCESS Literature Review First draft of questionnaires (purpose & technique) Theoretical issues of risk management of exchange rate Knowledgeable individuals Factors affecting risk management of exchange rate Criterions for accessing the quality of risk management of exchange rate Historical data analysis Data Processing Knowledgeable individuals Research Report Final draft of questionnaire Survey by questionnaires ...MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY NGÔ TRẦN KIẾN QUỐC RISK MANAGEMENT OF EXCHANGE RATE IN FOREX TRADING CASE STUDY OF COMMERCIAL BANKING SYSTEM IN HO CHI. .. Ho Chi Minh City SBV : State bank of Viet Nam SBV-HCMC : State bank of Viet Nam of Ho Chi Minh city CBS-HCMC : Commercial banking system of Ho Chi Minh City CB-HCMC : Commercial banks in Ho Chi. .. pointing out factors affecting to the current method of risk management of exchange rate of CBS-HCMC Some practical issues of risk management of exchange rate of commercial banking system in