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NONDELIVERABLE forwards, or NDFs, a hedging tool
instituted by government through the Development Bank of
the Philippines (DBP) to help the export industry whose
members have been hurting from the rise of the peso, has
been used to as much as $3.8 billion over the last three
years up to end-April this year.
This was
reported by Bangko Sentral ng Pilipinas (BSP) Governor
Amando Tetangco Jr. on Wednesday.
NDFs
allow exporters to soften the impact of the rising peso,
which started its trek upward in 2005 when the country’s
macroeconomic underpinnings began to turn the corner.
The
stronger peso presented exporters diminished returns
from their foreign-exchange earnings. The BSP also
incurred a P41-billion loss on account of the peso’s
volatility, according to Tetangco.
“We’re
supposed to be long on dollars, so when the peso
strengthened, we became passive losers,” said deputy BSP
Governor Diwa Guinigundo.
He said
the growth in the financial- derivatives market during
the period proves the utility of the hedging tools not
just for exporters, the banks and the big corporations,
but especially the medium and smaller businesses as
well.
“We
would like to see this expand further. We would like to
provide a venue for imparting information on
what hedging facilities are available,” said Tetangco at
a conference the BSP organized to promote hedging to the
exporters.
But he
does not want additional mechanisms that hint of subsidy
or preference for exporters who, as a group, posted
growth averaging 6.3 percent in the first seven months.
“Let me
reiterate that a strong peso is not the BSP’s policy.
Our policy has always been, and will continue to be, for
a market-determined exchange rate, with occasional scope
for official action to smoothen excessive volatilities,
and this we do whether the exchange rate was going up or
down,” he said.
Analysts
predict the peso will continue to strengthen toward the
end of the year to around P43 per dollar with the
increased holiday remittances of overseas Filipinos.
Attracted by the country’s consolidating fiscal sector
and the turmoil elsewhere in the global markets, there
has been also a rise in the inflow of foreign funds,
which will also boost further the value of the peso.
The
monetary board that Tetangco chairs meets today to
decide whether the rate at which the BSP borrows from or
lends to banks on overnight basis remains appropriate. |
