Islamic cross-currency swap
An alternative to a cross-currency swap that exchanges profit and principal flows in two currencies through commodity trades.
An Islamic cross-currency swap lets two parties exchange obligations in one currency for obligations in another, matching funding and assets across currencies. It is typically built from commodity murabaha trades in each currency, arranged so that each party pays in the currency it needs. ISDA and IIFM publish standard two-sale templates for it, including updated versions.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
Islamic profit rate swapAn alternative to an interest rate swap that exchanges fixed and floating profit flows through commodity murabaha trades.Tahawwut (hedging)Hedging; in Islamic finance, risk management transactions built from permissible contracts rather than conventional derivatives.Commodity murabahaInterbank and treasury deals in which commodities are bought and sold on deferred payment to place or raise short-term funds.Bay al-sarf (currency exchange)An exchange of money for money, of the same or a different currency, which must be settled on the spot.