Rules is­sued for hedg­ing fa­cil­ity

Manila Times - - Business Times -

MON­E­TARY au­thor­i­ties have is­sued en­hanced guide­lines for a hedg­ing fa­cil­ity aimed at pre­vent­ing cur­rency spec­u­la­tion among busi­nesses and eas­ing de­mand pres­sure on the peso- dol­lar ex­change rate.

The Cur­rency Rate Risk Pro­tec­tion Pro­gram (CRPP), which the Bangko Sen­tral ng Pilip­inas ( BSP) re­ac­ti­vated ear­lier this month as the peso hit new lows against the green­back, will be of­fered through uni­ver­sal/ com­mer­cial banks for clients seek­ing to hedge fu­ture for­eign ex­change ex­po­sures.

It in­volves a non- de­liv­er­able US dol­lar/ Philip­pine peso for­ward ( NDF) con­tract be­tween the cen­tral bank and a uni­ver­sal/ com­mer­cial bank.

“In an NDF con­tract, only the net dif­fer­ence be­tween the con­tracted for­ward rate and the spot rate shall be set­tled in pe­sos upon ma­tu­rity of the con­tract,” the BSP said.

El­i­gi­ble un­der the CRPP fa­cil­ity are un­hedged for­eign cur­rency obli­ga­tions of not less than $ 50,000.00 that are cur­rent and out­stand­ing as of the date of ap­pli­ca­tion.

Th­ese in­clude Bangko Sen­tral- re­ported/ reg­is­tered short- term ( ST) trade- re­lated loans from el­i­gi­ble banks, medium/ long- term trade- re­lated For­eign Cur­rency De­posit Unit/ Reg­u­lar Bank­ing Unit loans with pay­ments ma­tur­ing within 90 days as of date of ap­pli­ca­tion, ST trade- re­lated bor­row­ings of oil com­pa­nies from off­shore bank­ing units and US dol­lar trust re­ceipts, among oth­ers.

“The max­i­mum tenor of the CRPP con­tract is 90 days with op­tion to reavail,” the Bangko Sen­tral said.

Ex­po­sures un­der the CRPP fa­cil­ity will not be sub­ject to NDF po­si­tion lim­its. Also, re­duced mar­ket risk cap­i­tal charges will be ap­plied for net open po­si­tions for NDFs un­der the fa­cil­ity.

Lastly, the BSP said that uni­ver­sal banks/ com­mer­cial banks will not need ad­di­tional ap­provals since trans­ac­tions un­der the CRPP are con­sid­ered as gen­er­ally au­tho­rized de­riv­a­tives ac­tiv­i­ties.

“The terms, con­di­tions and the re­port­ing re­quire­ments of the CRPP Fa­cil­ity will be cov­ered by a sep­a­rate is­suance on the im­ple­ment­ing guide­lines of the CRPP Fa­cil­ity,” it said.

The last time the CRPP was im­ple­mented was in 2009.


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