Bangladesh Bank has allowed authorized dealer (AD) banks to offer commodity price hedging products to eligible importers with aiming to help them manage volatility in global commodity markets as officials said.
The move is designed to improve cost planning and boost business competitiveness by protecting importers from adverse price swings. Previously the importers needed prior central bank approval for such hedging transactions.
Under new guidelines issued Monday, importers with genuine commodity import needs can hedge through AD banks using internationally recognized tools such as futures, swaps, forward contracts linked to commodity indices and options. The facility covers importers of raw materials, intermediate goods, essential commodities and strategic imports.
Importers may hedge up to 100 percent of their underlying exposure with subject to documentation and risk management requirements. The guidelines stress that hedging must be used strictly to manage risk not for speculative trading.
AD banks are required to conduct due diligence, maintain proper documentation, disclose risks and report transactions to Bangladesh Bank. The framework also allows structured hedging arrangements including options and swaps also provided they remain tied to genuine commercial exposure.
