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By William B. Depasupil, Reporter
THE government-owned Development Bank of the
Philippines (DBP) has already covered some $5 million in remittances
from overseas Filipino workers (OFWs) who availed of the bank’s
hedging facility designed to protect the workers’ earnings from
erratic peso-dollar exchange rate.
“So far, we were able to cover some $5 million
based on a minimum annualized basis of $1,000. Most of our OFWs earn
more than $1,000,” former labor secretary and now DBP Chairman
Patricia Sto. Tomas told The Manila Times.
The hedging facility was implemented late last
year to help OFWs cope with the continuing appreciation of the peso
against the US dollar. The strong peso reduces the value of the
dollar remittances being sent to the families of OFWs.
Sto. Tomas said they expect that more OFWs would
avail of the hedging facility in the months to come.
The OFWs, she added, has two options to choose
from—foreign exchange rate protection and/or foreign exchange
insurance.
Under the first option, Sto. Tomas explained,
the remittance-deposit would enjoy a guaranteed return and a measure
of protection against the fluctuating peso-dollar exchange rate.
The contract entails no charges and offers a
fixed rate at a specified future date, thereby protecting the user
in case the peso appreciates.
“If your contract is P41 to $1, you will get
the same rate even if it becomes P38 to $1 amount if the peso depreciates,”
she said.
The second facility, Sto. Tomas added, allows
OFWs to sell their dollars to the bank at a specified amount on a
specified date but with minimal charges.
“Under the second option, the OFWs can sell
their dollars at a higher rate on maturity date. If the peso
appreciates, the selling party will still be able to sell at the
agreed protection rate,” she pointed out.
However, Sto. Tomas said, the said hedging
facility is only available at the DBP at the moment as it is not a
profit-making venture.
“It doesn’t make money. That is why it is
limited to the DBP. We are doing this as a public service,” she
further said.
The hedging facility idea was first raised by
Chairman Dante Ang of the Commission on Filipinos Overseas (CFO) to
Vice- President Noli de Castro, who, in turn, talked with the DBP
and with several other banks for implementation.
“This is a win-win solution to cushion
the effect of the continuing appreciation of the peso against the
dollar and address in the process the concerns of millions of OFWs
and migrant Filipinos on the lower purchasing power of their dollar
remittances,” Ang said.
Labor and Employment Secretary Arturo Brion, for
his part, said he is optimistic that in due time, other banks
would catch on and offer similar, if not the same, measure.
Brion also encourages OFWs to avail themselves
of the hedge program to increase their savings and avoid the
pitfalls of the so-called rags-to-riches-to-rags syndrome.
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