DBP Hedging Program for OFWs

New DBP Program Shields OFWs Against Strengthening Peso

Overseas Filipino workers (OFWs) and their families can now benefit from a new program being offered by DBP that seeks to help cushion their remittances against the continued appreciation of the peso.

President & CEO Reynaldo G. David announced that the DBP OFW Hedging Program is being made available through authorized manning companies or OFW associations. OFWs may hedge their remittances through two products, namely: the FX insurance and outright forwards. All transactions under the program, he added, must be in US dollar or Philippine peso, thus remittances in other currencies must be in equivalent US dollar amount.

“Through the FX insurance, OFWs may opt to sell their US dollars against the peso to DBP at a specified price on a specified date, thus offering them the opportunity to gain from peso depreciation. It also shields their remittances against a strengthening peso based on an agreed protection rate to be determined by the client,” President David explained.
Minimum amount that may be hedged through the FX insurance is $10,000 at a maximum term of three months. The insurance fee shall be dependent on market rates, the movement of the US dollar/Philippine peso, and the agreed protection rate.

The outright forwards, meanwhile, is a foreign exchange contract where the an OFW may sell his US dollars and buy Philippine pesos at a pre-agreed rate for delivery on a future date. “OFWs availing themselves of this product will not have to pay any fees, plus they get the major benefit of security against foreign exchange fluctuations,” President David added.

OFWs may opt to hedge a minimum amount of $10,000 under the outright forwards at a maximum term of six months. The forward rate shall be determined by DBP. Manning companies or OFW associations participating in the program must place a holdout deposit with a minimum maintaining balance of $1000 with DBP depending on contract amount, or establish a credit line subject to Bank approval.

The following documents must also be submitted: authorization of manning company/OFW association to engage in the DBP OFW Hedging Program, employment contract or schedule of salaries from manning or principal institutions, and other documents as required under the DBP guidelines.

For more details on the DBP OFW Hedging Program, interested parties may contact the DBP Remittance Center or Treasury Department at telephone numbers 8921232 (direct line) or 818-9511 locals 2224 and 3219.

[source: DBP]