Islamic forex hedging transactions involve tangible assets and the exchange of commodities, which are essential to the underlying contract. Is hedging useful in financial risk management and to what extent can it be used to enhance returns?
Islamic forex hedging does not necessarily involve tangible assets and the exchange of commodities, as there are ways to execute forex options without an exchange of assets. However, the majority of hedging transactions do involve a combination of Murabahah/Musawwamah. This is because a financial right, such as an FX option or an FX forward, is not considered a valid asset to purchase in an Islamic transaction. Therefore, one has to circumvent these rules by conducting front end and/or back end....
Restricted access
Login to continue reading (existing subscriber)
Gain access NOW!
Why not join more than 23000 other industry leaders and subscribe today and gain instant access to over 70000 exclusive articles, reports, interviews, case studies, podcasts, videos and much much more.
Register Now Subscribe Today