various currencies, including US dollar, euro, sterling and Singapore dollar on Wednesday this week. The bank also launched a new range of Islamic treasury hedging solutions for Singapore and the Asia-Pacific region.
Commodity Murabaha investment is an investment and financing product that constitutes almost 70% of Islamic short- and medium-term money market transactions in the Middle East. Citigroup will offer Islamic equivalents of interest rate swaps, FX forwards and cross currency swaps through its Islamic Treasury Hedging Solutions to ensure that clients have a wide range of instruments that allow them to hedge their market risks in a Sharia-compliant way.
These new products, billed as firsts of their kind in the region, are on the market through Citibank NA Singapore and are targeted at onshore and offshore Islamic institutions and institutions engaged in Islamic offerings that wish to manage their funds in a Sharia-compliant manner. (Before launching this product, Citigroup obtained Sharia approval from scholars in the Middle East and Asia.) Citigroup's aim is to meet the rising demand for Murabaha investments in Singapore and around the region, as well as to serve the needs of private and institutional investors seeking multi-currency investments in the Islamic world.
ôThe launch of our multi-currency commodity Murabaha investment products will provide our clients with more investment choices in the Islamic financing market,ö says Sim Lim, head of emerging market sales and trading for the region at Citigroup. ôAs the first bank to provide Murabaha investment products in Singapore and SGD currency globally, we also see this as a catalyst to the development of more Islamic investment products in the market place. We believe the development of our new Islamic Treasury Hedging Solutions will lead to more Islamic cross-border deals and increase cross-border investment flows into the Asia-Pacific region.ö
Citigroup's latest offering follows the approval from the Monetary Authority of Singapore (MAS) in June this year to enable banks to facilitate Murabaha transactions in Singapore. Experts estimate global Islamic financing is between $300 to $350 billion, and is expected to grow at a rapid rate of 15% annually over the next decade -- so both Singapore and Malaysia have been making efforts to capture more of this market.