Lender attempts to teach SME customers and offer promotional campaigns to hedge against financial risk.
Siam Commercial Bank (SCB) is urging SME customers to hedge foreign exchange risk at 50% of their total worth to protect against possible losses from the stronger baht, says executive vice-president Trirong Butragaht.
Currently, SMEs now typically hedge forex risk at only 20% to 30% of their total worth.
SCB's economic center forecasts the local currency will strengthen to 31.10 baht to the US dollar by year-end and could reach 30.70 baht next year. As a result, the bank is advising SME customers to buy forward contracts for three to six months.
Too few customers hedging and low hedging value in forex protection are results of insufficient knowledge and currency speculation.
However, SCB is trying to educate SME customers and offer promotional campaigns encouraging them to hedge against financial risk.
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