---
title: "What is Muwaadah (mutual promise)? | IslamicOpenFinance™"
description: "An exchange of promises between two parties for the same future transaction, treated more restrictively than a unilateral wa'd."
url: https://islamicopenfinance.com/glossary/muwaadah/
lang: en-GB
source: "IslamicOpenFinance"
---

[Glossary](https://islamicopenfinance.com/glossary/) / [Treasury, liquidity and hedging](https://islamicopenfinance.com/glossary/#treasury)

Treasury, liquidity and hedging

# Muwaadah (mutual promise)

An exchange of promises between two parties for the same future transaction, treated more restrictively than a unilateral wa'd.

Muwaadah is a mutual promise, in which each party promises the other to enter into the same future transaction. Because binding mutual promises can function like a forward contract, many scholars and standard setters restrict them, particularly in currency exchange, while accepting them where they are non-binding or in limited cases. Islamic hedging structures therefore often use two separate unilateral promises with different trigger conditions.

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

[**Wa'd (promise)** A unilateral promise to do something in the future; it can be made binding and is used in hedging, sukuk and lease-to-own deals.](https://islamicopenfinance.com/glossary/wad/) [**Islamic FX forward** A currency hedge built on a binding promise to exchange at an agreed rate on a future date, with the exchange itself done at spot.](https://islamicopenfinance.com/glossary/islamic-fx-forward/) [**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.](https://islamicopenfinance.com/glossary/bay-al-sarf/)

**Treasury, liquidity and hedging**

1. [Commodity murabaha](https://islamicopenfinance.com/glossary/commodity-murabaha/)
2. [Wa'd (promise)](https://islamicopenfinance.com/glossary/wad/)
3. [Tahawwut (hedging)](https://islamicopenfinance.com/glossary/tahawwut/)
4. [Islamic profit rate swap](https://islamicopenfinance.com/glossary/profit-rate-swap/)
5. [Islamic FX forward](https://islamicopenfinance.com/glossary/islamic-fx-forward/)
6. [Islamic cross-currency swap](https://islamicopenfinance.com/glossary/islamic-cross-currency-swap/)
7. [Interbank investment wakalah](https://islamicopenfinance.com/glossary/interbank-investment-wakalah/)
8. [Collateralised murabahah](https://islamicopenfinance.com/glossary/collateralised-murabahah/)

[All 221 terms](https://islamicopenfinance.com/glossary/)