BB launches hedging facility to manage import price risk

Bangladesh Bank has introduced a commodity price risk hedging facility for importers, aimed at reducing the risk of price fluctuations in international markets.

A hedging facility allows businesses to lock in prices or use financial contracts to protect themselves against international market volatility, making future import costs predictable. Previously, importers required prior approval from Bangladesh Bank for commodity price hedging.

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According to a directive issued today, authorised dealer (AD) banks will be able to offer eligible importers a range of price risk management facilities without case-by-case approval from the central bank.

Under the directive, eligible importers can use internationally recognised hedging instruments—including commodity futures, swaps, commodity index-based forward contracts, and options—against actual import liabilities.

Importers of raw materials, intermediate goods, fuel, edible oil, metals, grains, and fertiliser, among other essential commodities, will fall under this facility.

Importers can hedge up to 100 percent of their actual import exposure, subject to the required documentation and risk management guidelines.

This will allow importers to protect themselves against abnormal price spikes in international markets and make cost planning easier for businesses.

Bangladesh Bank clarified that hedging does not permit speculative trading and is solely a mechanism to reduce price volatility risk in international markets. AD banks must ensure proper due diligence, record-keeping, risk disclosure, and reporting to Bangladesh Bank.

Business circles have welcomed the initiative, saying it will help importers with cost forecasting, business planning, and competitiveness amid global price volatility.