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Following the drop in crude oil prices from a peak of US$114 per barrel in July 2014 to as low as US$33 per barrel in January 2016, the country’s reserves have suffered great pressure from speculative attacks, round tripping and front loading activities by actors in the foreign exchange (forex) market. The fall in oil prices also implied that the Central Bank of Nigeria’s (CBN) monthly foreign earnings had fallen from as high as US$3.2bn to current levels of as low as US$1bn. The net effect of these combined forces unfortunately is the depletion of the nation’s forex reserves. As of June 2014, the stock of forex reserves stood at about US$37.3bn but has declined to around US$28.0bn as of today. To avoid further depletion of reserves, the CBN adopted a number of policies including the prioritisation of the most critical needs for forex. This paper aims to critically analyse the effects of these policies on financial inclusion, anti-money laundering (AML) measures and human rights. Its aim is also to determine whether CBN’s Forex Policy does strike a fair balance between financial stability, inclusion, AML measures and human rights.

This paper relies mainly on primary and secondary data drawn from the public domain. It also relies on documentary research.

This paper determined that the CBN forex policy does not strike a fair balance between financial stability, inclusion, AML measures and human rights.

This paper focuses on the effect of the most recent CBN Forex Policies on financial inclusion, AML measures and human rights. It does not address the older policies. Also, it does not address other vulnerable groups like low-income households. Its focus is on the under-served group.

While many have written papers on CBN’s forex policies, none of those papers critically analysed the effects of these policies on financial inclusion, AML and fundamental rights. The Lagos Chamber of Commerce and Industry, for example, analysed the impact of these polices on the financial services sector; the manufacturing sector; food and household products; tyre and rubber industry; pharmaceutical sector, oil and gas sector; free trade zone sector; furniture manufacturers; and foam manufacturers. It made no mention of inclusion, money laundering and fundamental rights. Also, Vincent Haruna analysed the effect of these policies on Nigerians, particularly those engaged in international trade, and those who have children studying abroad. He neither specifically addressed financial inclusion nor did he make any mention of human rights and money laundering.

Drawing upon underinvestment theory and clientele effect hypothesis, this paper aims to examine the effects of foreign currency (forex) exposure and Shari’ah-compliant status on firms’ financial hedging strategy.

Based on data of 250 nonfinancial firms listed on Bursa Malaysia from 2010 to 2018 (2,250 firm-year observations), the authors test the impact of forex exposure based on a vector of foreign-denominated cash flows (FCF) indicators and firms’ Sharīʿah-compliant status on two proxies of financial hedging decisions, namely, the ratio of the notional value of currency derivatives to total assets and a binomial measure of hedging status. The hedging decision models are estimated using panel logistic regression and system generalized method of moments.

The results indicate significant positive effects of the forex exposure indicators on firms’ propensity to hedge. However, the impact of forex exposure is most prevalent via total FCF. The results also reveal significant positive effects of Sharīʿah-compliant status on firms’ propensity to hedge but its negative impacts on the value of currency derivatives they use. The results suggest that Sharīʿah-compliant firms refrain from engaging in currency derivatives to avoid riba’ and subsequently subdue the clientele effect. However, when the forex exposure reaches higher levels, engagement in currency derivatives becomes a matter of tentative necessity (dharurat).

This study relies exclusively on the disclosure of foreign currency risk and management data in the annual reports of listed companies. Consequently, this limits the sample size to only those nonfinancial listed companies with complete data for the study period. Also, since none of the companies reports using Sharīʿah-compliant derivatives, the authors thus assume that they use derivative instruments that tolerate “riba.”

Given the significance of forex exposure on hedging decisions, the accounting profession must strictly adopt FRS 7 and FRS 139 for all listed firms to avoid market scrutiny and sustain their clientele. The results also call for the Islamic market regulators to include mandatory disclosure of conventional currency derivatives in screening firms for clearly prohibited activities to help enhance the credibility of its Islamic financial market.

Due to difficulty accessing relevant cash flow data, the study is among the few studies that measure forex exposure using FCF and test more proxy indicators. This study is perhaps the first to examine the Shari’ah perspective on currency derivatives in corporate forex risk management.

This study aims to evaluate the compliance of online Islamic FOREX products with Islamic jurisprudence principles and determines the degree of similarity or difference between Islamic and conventional FOREX products.

This study involves the collection and analysis of secondary data from online sources (i.e. four Islamic FOREX Web sites selected on the basis that they appeared on two Islamic FOREX Web site lists) It also undertakes content analysis of the rulings of jurisprudence scholars on one of the Web sites.

There is no evidence to suggest that the technical processes underpinning current Islamic FOREX products are any different to those underpinning conventional FOREX products. Also there are major contradiction and ambiguities in the rulings offered by the jurisprudence scholars about the permissibility of the products.

The study relies on the analysis of secondary data. Further research that will involve interviews with banking industry employees in both conventional and Islamic banking sectors would provide a better understanding of: how financial products are created and managed and the role of bank regulations in creating and managing different financial products.

It would seem that Islamic FOREX is simply rebranding of conventional FOREX. The paper calls for a modern-day definition of usury (riba).

The way Islamic FOREX is marketed today to online users as synonymous with gambling, and, although branded as Islamic, the actual technical processes that underpin Islamic FOREX products are the same as conventional FOREX products and therefore not compliant with Islamic principles.

This research explores the marketing of Islamic FOREX products.

The purpose of this paper is to find and describe some stylized facts for foreign exchange and stock market returns, which are explored using statistical methods.

Formal statistics for testing presence of autocorrelation, asymmetry, and other deviations from normality are applied. Dynamic correlations and different kernel estimations and approximations to the empirical distributions are also under scrutiny. Furthermore, dynamic analysis of mean, standard deviation, skewness and kurtosis are also performed to evaluate time‐varying properties in return distributions.

The findings include: different types of non‐normality in both markets, fat tails, excess furtosis, return clustering and unconditional time‐varying moments. Identifiable volatility cycles in both forex and stock markets are associated to common macro financial uncertainty events.

The paper is the first work of this type in Peru.

The purpose of this study is to discover and model the asymmetry in the price volatility of financial markets, in particular the foreign exchange markets as the first underlying applications.

The volatility of the financial market price is usually defined with the standard deviation or variance of the price or price returns. This standard definition of volatility is split into the upper part and the lower one, which are termed here as Yang volatility and Yin volatility. However, the definition of yin‐yang volatility depends on the scale of the time, thus the notion of scale space of price‐time is also introduced.

It turns out that the duality of yin‐yang volatility expresses not only the asymmetry of price volatility, but also the information about the trend. The yin‐yang volatilities in the scale space of price‐time provide a complete representation of the information about the multi‐level trends and asymmetric volatilities. Such a representation is useful for designing strategies in market risk management and technical trading. A trading robot (a complete automated trading system) was developed using yin‐yang volatility, its performance is shown to be non‐trivial. The notion and model of yin‐yang volatility has opened up new possibilities to rewrite the option pricing formulas, the GARCH models, as well as to develop new comprehensive models for foreign exchange markets.

The asymmetry of price volatility and the magnitude of volatility in the scale space of price‐time has yet to be united in a more coherent model.

The new model of yin‐yang volatility and scale space of price‐time provides a new theoretical structure for financial market risk. It is likely to enable a new generation of core technologies for market risk management and technical trading strategies.

This work is original. The new notion and model of yin‐yang volatility in scale space of price‐time has cracked up the core structure of the financial market risk. It is likely to open up new possibilities such as: a new portfolio theory with a new objective function to minimize the sum of the absolute yin‐volatilities of the asset returns, a new option pricing theory using yin‐yang volatility to replace the symmetric volatility, a new GARCH model aiming to model the dynamics of yin‐yang volatility instead of the symmetric volatility, new technical trading strategies as are shown in the paper.

The purpose of this summary is to provide excerpts of selected Financial Industry Regulatory Authority (FINRA) regulatory notices issued from September to November 2008.

The paper provides excerpts from FINRA Regulatory Notice 08‐54, Guidance on Special Purpose Acquisition Companies; Regulatory Notice 08‐62, Limit on Close Case Submissions; 08‐66, Retail Foreign Exchange; and 08‐70, FINRA Investigations.

Notice 08‐54: Special purpose acquisition companies (SPACs) are shell companies that raise capital in initial public offerings (IPOs) for the purpose of merging with or acquiring an operating company. Notice 08‐62: Effective November 24, 2008, FINRA will limit the circumstances under which parties may make submissions to arbitrators in closed cases. Notice 08‐66: The retail over‐the counter foreign currency exchange (retail forex) market is opaque, volatile and risky. Broker‐dealers who engage in forex business with their retail customers must comply with the FINRA rules that apply to those activities. Notice 08‐70: FINRA is issuing this guidance to apprise firms of the circumstances in which extraordinary cooperation by a firm or individual may directly influence the outcome of an investigation.

These are direct excerpts designed to provide a useful digest for the reader and an indication of regulatory trends. The FINRA staff is aware of this summary but has neither reviewed nor edited it. For further detail as well as other useful information, the reader should visit www.finra.org

With the introduction of a much more flexible exchange rate “system” in the 1970s, the need to predict currency movements has become an increasingly important preoccupation of the corporate treasury. At the same time, however, the task of making reasonable exchange rate predictions has become very much more difficult. Are the forecasting problems now insuperable? This paper presents the record of one of the major forecasting services, in its attempt to out‐predict or “beat” the forward rate over the period October 1975 to January 1978.

The purpose of this paper is to investigate whether the shariah-compliant status of the firms negatively influences their use of foreign exchange hedging instruments.

This paper uses a logit panel regression on 350 firm-year observations from 70 nonfinancial listed firms over the period from 2010 to 2014. Shariah-compliant companies account for about 84 per cent of the sample firms.

Preliminarily, the results show that none of the samples of the shariah-compliant firms report any use of Islamic hedging instrument, either in the form of wa’d or tawarruq. The results of the study’s logit panel regression contradict the authors’ prediction that the shariah-compliant status negatively influences firms’ decision to hedge. In contrast, shariah-compliant companies are twice as likely as their conventional counterparts in adopting forex hedging.

This study is limited to information disclosed in the items 31, 36 and 37 of financial management policies in the annual report. However, given that shariah-compliant firms must abide by the limit of 5 per cent profits before tax from clearly prohibited activities (including riba’), the need for exclusive disclosure on the adoption of Islamic or conventional hedging appears to be imperative for the viability of the Malaysian Islamic capital market.

In evaluating the shariah compliance of a company, investors (individual or institutional) must look further than just interest-based riba’ in mixed-business companies to ensure that they comply with the 5 per cent maximum requirement on the non-halal business contribution to profit. This is because the finding of this study indicates that shariah-compliant companies are twice as likely to adopt forex hedging, when none of them reports the use of Islamic hedging tools. Investors must therefore give ample allowance to riba’ that can be induced through the use of conventional forex hedging instruments. This is until the security market regulator imposes a requirement on shariah-compliant companies an explicit disclosure of the use of Islamic versus conventional hedging tools, as they had done in the case of Islamic versus conventional debt instruments.

Muslim and socially responsible investors rely on the Shariah-compliant status of the company in ensuring that their wealth grows according to the Shariah principles. To sustain and develop the Islamic capital market which the firms have been relying on for external capital, Shariah-compliant firms and the authority awarding the status are equally responsible for honoring the trust that these investors by ensuring the permissibility (halal) of the business and the conduct of their business.

Conventional forex hedging instruments are criticized for violating as-sarf, a shariah principle, which requires the exchanges of particular assets (gold, silver and currency) to be delivered on the spot, and thereby infusing riba’ al-fadhl. Although Islamic (wa’d- or tawarruq-based) hedging instruments are widely available by Islamic banks in this country since they were introduced by Bank Negara Malaysia in 2010, paradoxically, the authors’ observation indicates that none of the studied firms reports the adoption of these instruments in their annual reports.

The purpose of this paper is to look at the impact that unanticipated changes in the exchange rate, specifically the currency crises that took place in Latin America between 1998 and 2004, had on the value of Spanish companies operating in this region. It also studies the strategies, decisions, measures and initiatives that these firms made to improve the effectiveness of their hedging activities. Building upon previous studies in industrialised countries, the study applies a broader perspective as it takes a cross‐functional approach by including finance, strategic planning, marketing and operations management in the analysis.

The paper uses qualitative and quantitative analyses to reach its conclusions. The quantitative study involves a time series regression to calculate a foreign exchange exposure (FOREX) coefficient. The qualitative analysis uses a systematic approach to develop categories from the data gathered in the interviews. Finally, the conclusions from both analyses were summarised and combined. The data was collected from interviews containing structured and open‐ended questions with senior managers and directors of the largest Spanish investors in Latin America.

The research results suggest that foreign companies exposed to exchange risks in emerging markets gain resilience when they take a cross‐functional approach for the assessment and implementation of hedging strategies along with the decentralisation to subsidiaries of the decisions and implementation of hedging initiatives. This helps companies in: elaborating scenarios, assessing the possible impact of exchange rate variations, designing pre‐emptive measures and setting alternative strategies to mitigate potential impacts. This cross‐functional approach to managing risks in emerging markets seems to offer companies higher flexibility and new knowledge that can be shared among subsidiaries working in similar economic and political environments.

The results from this empirical study build upon previous works on FOREX and offer companies an alternative approach to minimise its impacts when operating in emerging markets.