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THEY
were slow in coming, but finally some of the country’s
major export firms have sought cover for P104 million
worth of export contracts with the Development Bank of
the Philippines (DBP).
DBP
president and chief executive officer Rey G. David said
most were engaged in the manufacture of handicrafts,
aquaculture, carageenan and garments and export their
products to the United States, Europe, India, Chile and
Japan.
DBP’s
hedging window for exporters has been available for some
time but has practically been ignored by an industry
that loves to complain whenever the local currency gains
strength against the US dollar.
He said
on Thursday the number that sought protective DBP cover
rose the past few weeks when the peso averaged P43.653
per dollar versus P44.380 in October and P46.130 in
September.
“Most of
the deals we’ve had with exporters were closed last
October. Clearly, exporters are now starting to realize
the benefits of this facility, particularly how they can
be protected against any peso appreciation,” David said.
Exporters are particularly vulnerable to rapid changes
in the value of the peso as the exchange rate may
already have moved against them from
the day they seal their export contracts to the time
they actually draw on the proceeds.
David
said DBP’s forex-protection program is a forward
foreign-exchange contract where the net difference
between the preagreed dollar-peso forward rate and the
market rate is settled at maturity in peso terms.
“This
entails no charges and offers a fixed exchange rate at a
specified future date, therefore protecting the exporter
at a certain rate if the peso appreciates,” David
explained.
He meant
the exporter who locks himself with a forward
three-month rate of, say, P43.10 per dollar, is
guaranteed that rate at maturity regardless of whether
the local unit may already have appreciated to, for
instance, P42 per dollar.
DBP also
offers a foreign-exchange insurance product that shields
exporters from fluctuations in the exchange rate by
permitting them to sell their dollar earnings to the DBP
at a pre-agreed price on a specified date.
DBP’s
hedging and insurance products are offered at minimum of
$10,000 with terms ranging from one to three months for
the forex insurance and up to a year for the forward
forex cover. |
