Research on the Path of Reducing Menu Costs to Minimize Exchange Rate Losses for Enterprises

Abstract

Following the 2005 exchange rate reform, the two-way volatility of the RMB-USD exchange rate has increased, making foreign exchange risks more unpredictable. This study constructs models and conducts multiple case analyses to explore how enterprises can reduce exchange losses by synergizing menu cost reduction with financial derivatives. The findings reveal: (1) Digitized dynamic pricing models effectively lower menu costs, thereby significantly reducing exchange losses. (2) Enterprises with higher digitalization investments demonstrate stronger capabilities in exchange rate forecasting and loss mitigation. This study provides novel insights and practical guidance for enhancing internal digital management and understanding the mechanisms of exchange loss reduction.