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The Principles and Practices of Shariah in Islamic Finance - page 26 / 49





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37. Any asset purchased in local or foreign currency by an IFI may be sold to the purchase orderer in any other agreed currency. The acquisition cost shall be based on the exchange rate on the day IFI purchases the asset from supplier.

Purchase of asset by

  • F in foreign


Illustration 9: The Effect of Currency Volatility on Murabahah Transactions

38. The IFI may reward a purchase orderer who honours the terms of the Murabahah contract by waiving part of the price.

Rewarding the purchase orderer for good payment

39.The IFI and the purchase orderer may agree to make settlement in a currency which is different from the currency specified in the contract at the prevailing exchange rate on the day of payment.

Full settlement of debt in a different currency

On the order of its client, the IFI purchases a car from France for an amount of USD50,000 to finance the client for Murabahah car financing at an agreed mark-up of 10% in Malaysian currency. On the purchase day, the exchange rate was USD1 to RM3.50, but on the day of the sale of the car to the purchase orderer, the Dollar has depreciated to RM3.20. In principle, this depreciation has no effect on the Murabahah sale contract, and the payment should be made according to the rate prevailing on the day the IFI purchased the asset from the supplier. The Murabahah selling price payable by the client is (1.1 X USD50,000 X 3.5) RM192,500.


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