Pakistan considers hedging oil import bill

Pakistan is considering hedging a sizable chunk of its oil bill after it rose 20 percent to $3.8 billion in the 2004/05 fiscal year due to a surge in global oil prices, a senior official said on Friday.

One of Asia’s fastest growing economies, with growth of 8.4 percent in the fiscal year ended June 30, Pakistan is also struggling to contain inflation sparked by rising fuel and food costs.

…Hedging is not without risks and oil prices are historically volatile. If the price rises further, Pakistan will be protected, but if it falls by more than either the government or banks foresee, Pakistan could end up losing money.

Daily Times