IslamicFinance.de

Growth in Asia’s foreign-currency sukuk issuance is being hindered by capital controls, leaving the Persian Gulf dominating a market that exceeded $17 billion in the past two years. Malaysia’s central bank requires local companies seeking to sell overseas bonds to show a legitimate funding need to reduce currency speculation. In Indonesia, corporations must supply information on the potential foreign-exchange risk, whether they intend to hedge, as well as their dollar and rupiah cash flows under rules put in place by the Financial Services Authority in 2002. This is because Malaysia and Indonesia want to protect their reputation and ensure that issuers won’t default on foreign-currency debt.