Al Rajhi Bank's Treasury Group launched its first derivative Shariah compliant product, the “FX Forward” hedging product. The first of its kind in the Islamic hedging market, it provides customers with solutions for future foreign exchange transactions as they can hedge exchange rate fluctuation by using the extended “Eyjab” concept.
Designed with an innovative product structure, it is the first of its kind in Islamic financial products approved by the Shariah Board. The product structure was developed internally by the Treasury Group team in collaboration with the Shariah Group to be consistent with hedge fund practices in financial institutions under TMA.
It is worth mentioning that Al Rajhi Bank signed agreements with some of the world’s largest banks to work with this product in accordance to the approved structure, and will continue to collaborate with several more banks in the future. The launch of this product is the beginning for the Bank to provide a series of Treasury derivative products to diversify Bank investment resources.
This new product is part of the Bank’s continuous efforts to develop customer services to meet expectations and evolving needs. The FX Forward product also contributes to the Bank's strategy to focus on improving the corporate banking sector and SME products - considerably the most to benefit from the new hedging product in addition to private banking customers.