EXCHANGE RATES AND THE FOREIGN EXCHANGE MARKET

Obiyathulla Ismath Bacha, Ali Zhang Hengchao and Mirzet Šeho

Chapter 12 in Islamic Capital Markets:A Comparative Approach, 2025, pp 341-375 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter is designed to provide an overview of foreign exchange markets, its activities, and the instruments traded. The chapter begins with a discussion of what exchange rates are, how they are quoted, and how changes in exchange rates are measured. Exchange rate exposure and its management are examined in depth. The chapter concludes with an examination of Shariah-compliant techniques for managing currency exposure. On completing the chapter, you should have a good understanding of how foreign exchange markets work and of the Shariah-compliant alternatives now available

Keywords: Islamic Banking; Islamic Finance; Capital; Capital Markets; Contracts; Instrument Design; Interbank; Interbank Money Market; Islamic Interbank Money Market; Bond; Bond Market; Sukuk; Sukuk Market; Common Stocks; Equity Markets; Islamic Equities Market; Derivative Instruments; Shariah; Shariah-compliant Derivative Instrument; Exchange Rates; Foreign Exchange Market; Digital Financial Assets; Blockchain; Financial Solution; Digital Financial Solution; Conventional Capital Market; Dual Market (search for similar items in EconPapers)
JEL-codes: F3 G15 G18 G23 G24 (search for similar items in EconPapers)
Date: 2025
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