Substitute of KIBOR in Islamic Banking?

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Substitute of KIBOR in Islamic Banking? - Karachi King - 05-22-2007

guys! i am having problem in one of my assignment. i was asked to prepare a report on the topic given above. i need to search & suggest the substitute of KIBOR in Islamic Banking. if any of you have any idea or you can help me in any aspect on this topic, then i am waiting for the reply.
Thank you

- Schuaeb - 05-23-2007

This is a complicated topic and its not very much probable to get answers to such questions on forums like this. Because people like me just having partial information cannot and should not give thier opinion.

Some senior member may be of some help

- Pracs - 05-23-2007

I am a layman myslef at this, but as far as I know most Islamic/Shariah products are priced using LIBOR (KIBOR etc.) a couple of suggestions worth exploring may be

1) Increase/decrease in value of Gold
2) Price of petrol

Let us know what you find out,,

- Karachi King - 05-23-2007

Prac! thanx for the suggestion but i am searching for the gold as a substitute of KIBOR for 2 days but still i m unsuccessful. if anyone of you have any further information or you could tell me how it could be treated as a substitute of KIBOR then it will be very helpful.

- derivativetrader - 05-24-2007

I've asked this to one of my friend who works in islamic banking in London. I'll let you know his response as soon as he is able to get back to me.

What sort of information would you be looking for when using gold as a proxy?

- Karachi King - 05-24-2007

thanx derivativetrader. actually we are supposed to give suggestions to Islamic Banks to use Gold/Silver/Oil Prices as a substitute of KIBOR. so to be specific, i need arguements in favour &/or against using these comodity rates as a substitute of KIBOR in Islamic Banking.

it will be very helpful & your effor will be highly appreciated, thanx again.

- derivativetrader - 05-24-2007

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by Karachi King
 thanx derivativetrader. actually we are supposed to give suggestions to Islamic Banks to use Gold/Silver/Oil Prices as a substitute of KIBOR. so to be specific, i need arguements in favour &/or against using these comodity rates as a substitute of KIBOR in Islamic Banking.

it will be very helpful & your effor will be highly appreciated, thanx again.
<hr height="1" noshade id="quote"></blockquote id="quote">

I'm still waiting for an answer from my friend. However, I would assume that gold/silver and oil prices would be linked to LIBOR/KIBOR. For instance, since gold is denominated in USD and whenever we see a depreciation in USD, the gold/oil prices shoot up, and according to interest rate parity, a fall in LIBOR would result is the depreciation of USD. So, I guess if you use gold or oil as substitutes for KIBOR/LIBOR, then it would be ambigious. What do you think?

DT

- Karachi King - 05-25-2007

well i am not sure about your arguement because gold prices are depending on plenty of factors & not just any. for example, balance of payments, inflation etc.

interestingly things i mentioned (i.e. gold/silver/oil prices) are actually suggested by my teacher. although i can look for other things as well but since money value is more related to gold, i believe we might have some arguement to use gold as a substitute for KIBOR/LIBOR. but unfortunately i can't find anything on this topic while searching on net for not less than 2 days.

anywayz...plz do inform me here as you get the reply of your friend. thank you.

- derivativetrader - 05-25-2007

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by Karachi King
 

gold prices are depending on plenty of factors & not just any. for example, balance of payments, inflation etc.

<hr height="1" noshade id="quote"></blockquote id="quote">

I don't think gold is directly linked with balance of payments.

- Karachi King - 06-01-2007

Any response?