The Monetary Board has approved the expansion of the coverage of the Currency Risk Protection Program (CRPP). First introduced in December 1997, the CRPP is a non-deliverable forward hedging facility. It is aimed at alleviating the strain on the spot market due to demand pressure from unhedged borrowers wanting to cover their future foreign exchange requirements due to fears of further peso depreciation.
Under the facility, parties agree that, on maturity of the forward contract, only the net difference between the contracted forward rate and the spot rate shall be settled in pesos.
The CRPP is being made available by the BSP to eligible borrowers through the commercial banks. Oil companies, exporters and other corporations with unhedged foreign exchange obligations registered with the Bangko Sentral-International Operations Department which are current and outstanding as of the date of the application will be eligible under the CRPP. Under the new guidelines, the access by oil companies will be expanded to include not only their loans and advances for their non-crude oil and non-refined importations and short-term working capital requirements but also other qualified foreign exchange requirements.