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COST and
inertia prevent the country’s exporters from seeking
cover for their exchange-rate risks, and this explains
in part the industry’s reluctance to avail itself of
hedging tools readily available in the market.
At a
briefing the Security Bank hosted on Tuesday, the chief
of its treasury department, Raffy S. Algarra Jr.,
declined to blame exporters for their reluctance, given
the relatively high cost of obtaining a security against
adverse changes in the exchange rate.
But, at
the same time, he urged the exporters “not to speculate”
on the off chance the US dollar will strengthen soon.
He
believes the exchange rate will average from P38 to P39
per dollar in the first half, although he also forecasts
the dollar to strengthen to around P42 before ending the
year at a high of P38 or P39 per dollar.
“The
time for the exporters to hedge is now, before they get
caught again with an even weaker dollar,” he said.
Algarra
has no direct hand in extending hedging tools for
exporters, but the anecdotal evidence show that a
typical cover for a $10,000 export shipment costs around
$200.
Considering that exporter margins are not very large to
begin with, Algarra said the current cost structures are
daunting for most.
He said
the Development Bank of the Philippines (DBP) has made
available $2 billion of its resources as dollar cover
for exporters, but has reported very few takers.
DBP
president Rey G. David said the bank has extended forex
cover on only $104 million, or just a small fraction of
total available funds, as forex cover as at end-November
2007.
According to Algarra, Security Bank has responded to the
call for the industry to extend forex cover for the
sector that contributes a substantial portion of overall
local output, or the gross domestic product.
Security
Bank, he added, has tapped some of its treasury
specialists to conduct hedging seminars that used to be
focused on Metro Manila and its immediate environs.
By
helping educate the small- and medium-scale exporters on
the merits and pitfalls of hedging, then there is an
upside that an entire industry can look forward to.
He
believes the cost of hedging tools would continue to
fall, especially after the BSP released new guidelines
on derivatives instruments.
The
guidelines make it safer for investors to take positions
in the market while observing full transparency all the
time. |
