GLOBAL: The heightened volatility in commodity prices, profit rates and exchange rates following the Iran war has reinforced the importance of Islamic derivatives as risk management tools, according to Fitch Ratings.
The ratings agency noted that around 75% of Fitch-rated Islamic banks used or offered Islamic derivatives in 2025 and Q1 2026, including full adoption at rated GCC Islamic banks. The instruments are primarily profit rate swaps, forward forex contracts and cross-currency swaps. Adoption is fragmented across countries and sectors, with usage rare among rated Takaful companies.
Islamic securitizations and Sukuk issuances are incorporating Islamic derivatives into their structures, although the Islamic derivatives market still lags behind its conventional counterpart across most core Islamic finance markets.
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