Indonesia is a country with a Muslim majority and hence the demand for Hajj (pilgrimage) is increasing especially for SAR (Saudi Arabian Real) currency during the peak hajj season. Unfortunately, the Hajj Financial Management Board (BPKH) as the Hajj (pilgrimage) authority has never hedged the hajj funds including the one based on Sharia (Islamic) principle. Then,in the continues weakening of the rupiah (IDR) exchange rate may invite the exchange rate risk that can affect the hajj funds. In fact, the issuance of Bank Indonesia (central bank) regulations and the National Shari Council’s (MUI) decisions on Islamic hedging is expected to become the guideline and VROXWLRQ IRU VKDULD ¿QDQFLHUVWR KHGJHWKH KDMM SLOJULPDJH IXQGV HYHQWKRXJKWKH\ KDYH QRW XWLOL]HGLW GXHWR the limited knowledge and understanding on Islamic hedging. This study aims to: (1) conduct a dynamic Islamic hedging simulation for the pilgrimage funds based on Islamic principle, (2) to identify the amount of cost savings coming from Islamic hedging, the optimal time and price to apply a dynamic Islamic hedging,and (3) to provide recommendations to BPKH in applying a dynamic Islamic hedging for its pilgrimage funds. Finally, the dynamic VLPXODWLRQRI,VODPLFKHGJLQJ¿QGVWKDWDWKHORQJHUWKHSHULRGRI,VODPLFKHGJLQJWKHJUHDWHUWKHFRVWVDYLQJV (b) the ideal time for Islamic hedging is when the economic condition is less stable such as on 2013-2015 and the IDR weakens against USD about 20%-30% and 40%-50%;(c) the worst time for Islamic hedging is when the IDR increase to SAR such as recent economic condition on 2016-2017 when IDR increase 10%-20% to SAR;(d) The implementation of Islamic hedging needs accurate time especially when IDR to USD and IDR to SAR weaken and the yield of Islamic money market up to 4%-6%, the yield of conventional foreign exchange money market 0.1%-0.4%, and the yield of Saudi Arabian inter-bank overnight market 0.3%-0.6%. Therefore, BPKH needs to PRQLWRUWKHÀXFWXDWLRQRI,'5H[FKDQJHUDWHDJDLQVW86'DQGDJDLQVW6$5DVZHOODV\LHOGVIURPWKHPRQH\PDUNHW instruments before the implementation of Islamic hedging