|
THE
Development Bank of the Philippines (DBP) offered to
local exporters Thursday two dollar-hedging options to
shield them from further losses resulting from the
continued peso appreciation.
Rey
David, its president, presented the plans to the
representatives of industry groups and chapters of the
Philippine Exporters Confederation (Philexport) at the
group’s membership meeting at the Dusit Nikko Hotel
Thursday.
He then
announced the $1-billion hedging facility will have 2
products—the FX Insurance and the Forward FX Rate
Protection.
The FX
Insurance will give exporters protection against peso
appreciation and at the same time an opportunity to gain
in case of a peso depreciation, but an insurance fee
will be charged for this plan based on market rates,
movement of the dollar/peso, and protection rate as
computed in the Bloomberg or Reuters prices.
David
gave an example, thus: On deal date, the peso-dollar
rate is at P46.29 and the exporter decides to peg the
protection rate at P45.80 and hedges $10,000 (which is
the minimum amount) for a term of one month.
On
maturity date, if the peso depreciates to P46.90 from
P46.29, the exporter can gain by selling at P46.90
instead of the protection rate of P45.80.
If the
peso appreciates to P45 from P46.29 on maturity date,
the exporter will get protection by selling his hedged
dollar at the protection rate of P45.80 as against the
prevailing rate of P45.
The
exporter only needs to pay DBP a 0.9-percent insurance
rate, or 42 centavos per dollar.
David
said for the Forward FX Rate Protection, what will be
settled at maturity will only be the net difference
between the dollar/peso forward and the market rate.
The
exporter will not be made to pay fees, although he will
be required to get credit approval from the DBP or put
up a deposit or cash margin.
The DBP
and exporter will determine the forward rate, which will
be calculated based on the interest rates of the peso
and dollar, the amount, and the tenor of transaction.
Again,
with the peso-dollar exchange rate at P46.29 when the
deal was made and the forward rate set at P46.35, if the
peso drops to P46.80 a day before the maturity, the
exporter can sell his dollars at P46.80.
The
exporter, however, will not benefit from it because he
will have to pay back the difference to the DBP.
If the
peso appreciates to P45.50 on maturity, DBP will pay the
exporter the difference between the forward rate of
P46.35 and P45.50 per dollar hedged.
David
said to make sure that the bank will not lose in these
schemes, DBP may have to invest the hedged dollars
somewhere else. “We are not going to make money out of
this. This is a pure public service.” |
