A lawmaker has urged the country’s banks to open hedging facilities that would enable overseas Filipino workers (OFWs) and their families to convert their US dollar remittances into pesos at pre-set exchange rates.
The hedging program would require $10,000 as the minimum placement in the facility, LPGMA party-list Rep. Arnel Ty said in a statement over the weekend.
Government should find ways to spur banks, particularly those that capture the bulk of inward remittances, to extend hedging facilities for OFWs, he said.
“This way, OFWs struggling with fixed costs can ascertain the exact amount of pesos that they will be getting periodically, regardless of fluctuations in the peso-dollar rate,” Ty said.
“This is one practical way to help our OFWs and their families here cope with the rising peso, with the fewer pesos they will be getting for every dollar,” he said.
Ty said hedging schemes would help OFWs who send home dollars to pay for fixed monthly costs, such as rent for an apartment, amortization of a new home or car, or school tuition installments.
Hedging contracts would allow OFWs to protect the peso value of their remittances by agreeing to sell their dollars at a designated exchange rate on a specified future date.
Without access to hedging contracts, Ty said households dependent on remittances and reeling from the strong peso have had no choice but to curtail spending.
“For example, a family receiving a $500-monthly remittance has effectively lost some P1,500 monthly compared to a year ago. Ironically, the household is losing the buying power at a time when virtually all commodity prices are soaring,” he said.
Last week, HSBC Holdings plc, one of the world’s largest banks and financial services companies, boldly predicted the peso would soar to P37.50:$1 by the end of 2011, and to P35.50:$1 by the end of 2012.
Other leading global financial firms also expect the peso to rise steadily against the dollar. Bank of America Corp., Goldman Sachs Group Inc., Barclays Plc, and DBS Group Holdings Ltd., all see the peso hitting 40 by year’s end.
The peso on Friday closed at P43.40:$1. At this rate, the peso had risen by around 6.5 percent or almost P3 against the dollar compared to a year-ago, when the local currency was trading at P46.30$1 on average. — VS, GMA News
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