The Arab Wealth Funds and the Rise of an “Islamic Corridor”

Abstract

In July 2005, the currency trading desks burst into action across the world. The euro had suddenly strengthened against the dollar. It wasn’t clear why. But the traders scrambled to dump their long dollar positions regardless. This wasn’t the time to stand in the way of the market. The traders had to pay widening spreads as the market gapped higher. The foreign currency market is the largest of the world’s financial markets, trading over $3 trillion a day.¹ A one-point miss on a €100 million trade would cost a trader $10,000. A ten-point miss would cost $1000. A large enough move might wipe out weeks of profit. Tempers flared and keyboards were smacked hard in frustration. Losing money was bad enough, but losing money without knowing why was gutting.