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Hedge Foreign Exchange Risk in PHP - Philippine Peso

Drapeau Hedge Foreign Exchange Risk in PHP - Philippine Peso

The Foreign Exchange Risk in Philippine Peso (PHP)

When conducting transactions with the Philippines, you may need to send payments or receive payments in Philippine Peso. You are then naturally exposed to foreign exchange risk. Indeed, between the time you invoice your client in PHP and the time you collect the PHP, or conversely between the time your supplier issues their invoice in PHP and you settle this invoice in PHP, the EUR/PHP rate may have moved in your favor or against you. It is to eliminate or minimize this risk of EUR/PHP rate movement (assuming your accounting currency is EUR) over a determined period that you can implement hedges on the EUR/PHP. By locking in the EUR/PHP rate in advance, you effectively gain better visibility on your future cash flows in Philippine Peso (PHP) and secure your EUR/PHP budget rate.

Hedging Foreign Exchange Risk on the Philippine Peso (PHP) with Mondial Change

Mondial Change allows you to hedge your foreign exchange risk on the Philippine Peso (PHP). Currently, foreign exchange risk hedging on the Philippine Peso can only be done through NDF (non-deliverable forwards) contracts. The NDF is a hedging instrument used to cover your foreign exchange risk on partially or non-convertible currencies. On the contract's expiration date, the rate at which the contract was concluded is compared with the fixing rate. The latter is official and published daily by the Central Bank of the concerned country. The NDF price represents the probability of a currency revaluation (or devaluation). Therefore, the NDF price will not be linked to the interest rate differential between the two currencies involved. The NDF thus allows you to hedge your foreign exchange risk without any cash flow being transferred in the non-convertible currency. You can schedule a meeting with our trading desk. A market expert advisor will assist you in setting up your foreign exchange hedges on the Philippine Peso (PHP).

To obtain accurate quotes on your hedges in Philippine Peso (PHP), we invite you to contact our trading desk.

Mondial Change Answers All Your Questions on Foreign Exchange Risk Hedging for Your Operations in Philippine Peso (PHP)

Are there minimum or maximum amounts for setting up hedges in Philippine Peso (PHP)?

The maximum amount of hedges in Philippine Peso (PHP) you can validate primarily depends on the size of the forward exchange line granted to you. The line conditions granted depend on the review of your financial statements. As for minimum sizes, we generally do not take hedges for amounts below 10,000 EUR (or equivalent in other currencies).

What is the maximum possible maturity for hedges in Philippine Peso (PHP)?

Generally, we do not offer hedges in Philippine Peso (PHP) for maturities exceeding 24 months, but this can be considered on a case-by-case basis. Please contact our trading desk for a personalized assessment of your needs.

What are the setup fees for hedging against foreign exchange risk in Philippine Peso (PHP)?

All fees related to setting up hedges in Philippine Peso (PHP) are included in the exchange rate communicated to you before validating your operation. The hedging is done by phone with a trading desk operator. No fees are applied to the use of your hedges.

Is a security deposit required to take a hedge in Philippine Peso (PHP)?

Again, this depends on the conditions of your forward exchange line. Thanks to its network of partners, Mondial Change generally manages to obtain forward exchange lines without an initial security deposit. Depending on your line conditions, margin calls may be triggered on your hedging contracts in Philippine Peso (PHP) if the EUR/PHP rate (or any other pair on which you have validated a hedge) deteriorates beyond the variation margin or beyond your OTM. In this case, you must deposit funds as collateral to maintain your contracts in Philippine Peso (PHP) open. Based on the review of your financial statements, lines without margin calls can sometimes be granted.

What is the current interest rate on the Philippine Peso (PHP)?
The current interest rate on the Philippine Peso (PHP) is "Currency Rate".

Are there any forward points or discount points on NDF contracts in Philippine Peso (PHP)?

It all depends on whether you are a buyer or seller of Philippine Peso (PHP) and against which currency you are trading the Philippine Peso. Taking an example against the euro: If you are a buyer of Philippine Peso (PHP) against the EUR, then there are report points because the interest rate of the Philippine Peso (PHP) is supérieur to that of the EUR. Conversely, if you are a seller of Philippine Peso (PHP) against the EUR, then there are déport points.

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