BSP expands FX hedging tools to boost capital market

MANILA — The Philippine central bank has approved new rules to give Filipinos more ways to protect themselves from changes in foreign exchange rates, as part of efforts to grow the country’s capital market. Before, only a few types of currency protection tools, called hedging instruments, were allowed involving the Philippine peso. These included deliverable and non-deliverable FX forwards, FX swaps, and cross-currency swaps.

Under the amended rules, the central bank said more tools like FX options and non-deliverable swaps and non-deliverable cross-currency swaps would be allowed to help people and businesses reduce the risk of losing money due to exchange rate changes. The central bank gave lenders six months from when the rules take effect to adjust their systems to ensure compliance. —Reporting by Karen Lema; Editing by Martin Petty.