Brokers and exporters of your favorite Colombian agricultural product are smiling this morning, as the New York Board of Trade is introducing a US Dollar-Colombian Peso futures contract. Colombia has no home-grown futures market, and until today currency hedging has been difficult challenge that could only be accomplished indirectly.
AFXNews explains why currency risk is such a major issue to Colombian exporters:
"Their costs of production -- largely labor and land -- is in local currency; what they sell is in dollars," said Greg Anderson, director of currency strategy with Netherlands-based AMN AMRO. "If their local currency rises against the dollar, all of a sudden they become a more expensive producer than some other place."
And the dollars they bring home buy less."
NYBOT to trade Colombian peso [AFXNews via FXStreet.com]