Boost competitiveness to qualify for hedging, exporters told
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said in a report filed by ABS-CBN.com that traders should focus on boosting their market competitiveness and study how to hedge their (foreign exchange) position, in order to protect them against peso’s appreciation.
Hedging was introduced by BSP in 2010, as a strategy to minimize exposure to an unwanted business risk such as foreign exchange fluctuations.
According to BDO Unibank Inc. chief market strategist Jonathan Ravelas, one type of hedging would be to secure a definite foreign exchange rate with your client ahead of his orders. That way, the exporter can secure that rate and he does not need to worry about where the rates will be in three months.
As reported by Guinigundo, BSP in partnership with private banks has conducted numerous seminars and distributed materials on hedging in the past.
However, Philippine Exporters Confederation president Sergio Ortiz-Luis Jr. said that since the hedging facility is for big shipments with amount of between 100 and 200 thousand US dollars, most of our exporters, 98 percent of which have small shipments, therefore cannot practice hedging.
Guinigundo addressed this by saying that exporters should therefore improve their competitiveness in the global market by increasing their productivity, enhancing their product quality, searching for new products and markets, and accelerating their turnaround.