Islamic banks in Indonesia recently discussed on the possibility of Tahawwuth (hedging) as an instrument of mitigating market risk in Islamic bank. It came up (again) following International Seminar on Islamic Finance in Bank Indonesia, 6th May 2014, coorganized by International Islamic Financial Market and Bank Indonesia.
Some people consider the instrument is not allowed based on DSN fatwa on Foreign exchange transaction, which allows spot transaction based on naqd principle while provides forward contract (as a part of hedging) only for hajiyat principle. Therefore, according to this assumption, forward contract is not allowed. It is allowed only within two conditions: it is in the form of agreement (not contract) and it has underlying transaction.
Some people consider the instrument is not allowed based on DSN fatwa on Foreign exchange transaction, which allows spot transaction based on naqd principle while provides forward contract (as a part of hedging) only for hajiyat principle. Therefore, according to this assumption, forward contract is not allowed. It is allowed only within two conditions: it is in the form of agreement (not contract) and it has underlying transaction.
