University of Bahrain
Scientific Journals

The Proposed Islamic Hedging for Hajj Funds in Indonesian Islamic Banking

Show simple item record Fikri, Riadi Ismal, Rifki Beik, Irfan Syauqi 2018-07-19T08:32:53Z 2018-07-19T08:32:53Z 2018-06-01
dc.identifier.issn 2469-259X
dc.description.abstract ndonesia is a country with a Muslim majority and hence the demand for Hajj (pilgrimage) is increasing especially for SAR (Saudi Arabian Real) currency during the peak hajj season. Unfortunately, the Hajj Financial Management Board (BPKH) as the Hajj (pilgrimage) authority has never hedged the hajj funds including the one based on Sharia (Islamic) principle. Then,in the continues weakening of the rupiah (IDR) exchange rate may invite the exchange rate risk that can affect the hajj funds. In fact, the issuance of Bank Indonesia (central bank) regulations and the National Shari Council’s (MUI) decisions on Islamic hedging is expected to become the guideline and solution for sharia financiers to hedge the hajj (pilgrimage) funds even though they have not utilized it due to the limited knowledge and understanding on Islamic hedging. This study aims to: (1) conduct a dynamic Islamic hedging simulation for the pilgrimage funds based on Islamic principle, (2) to identify the amount of cost savings coming from Islamic hedging, the optimal time and price to apply a dynamic Islamic hedging,and (3) to provide recommendations to BPKH in applying a dynamic Islamic hedging for its pilgrimage funds. Finally, the dynamic simulation of Islamic hedging finds that (a) the longer the period of Islamic hedging, the greater the cost savings, (b) the ideal time for Islamic hedging is when the economic condition is less stable such as on 2013-2015 and the IDR weakens against USD about 20%-30% and 40%-50%;(c) the worst time for Islamic hedging is when the IDR increase to SAR such as recent economic condition on 2016-2017 when IDR increase 10%-20% to SAR;(d) The implementation of Islamic hedging needs accurate time especially when IDR to USD and IDR to SAR weaken and the yield of Islamic money market up to 4%-6%, the yield of conventional foreign exchange money market 0.1%-0.4%, and the yield of Saudi Arabian inter-bank overnight market 0.3%-0.6%. Therefore, BPKH needs to monitor the fluctuation of IDR exchange rate against USD and against SAR as well as yields from the money market instruments before the implementation of Islamic hedging. en_US
dc.language.iso en en_US
dc.publisher University of Bahrain en_US
dc.rights Attribution-NonCommercial-ShareAlike 4.0 International *
dc.rights.uri *
dc.subject Hajj funds en_US
dc.subject Islamic hedging en_US
dc.subject IDR exchange rate en_US
dc.title The Proposed Islamic Hedging for Hajj Funds in Indonesian Islamic Banking en_US
dc.type Article en_US
dc.volume 04
dc.issue 01
dc.pagestart 1
dc.pageend 13
dc.source.title Journal of Islamic Financial Studies
dc.abbreviatedsourcetitle JIFS

Files in this item

The following license files are associated with this item:

This item appears in the following Issue(s)

Show simple item record

Attribution-NonCommercial-ShareAlike 4.0 International Except where otherwise noted, this item's license is described as Attribution-NonCommercial-ShareAlike 4.0 International

All Journals

Advanced Search


Administrator Account