Sharia Hedging: A Review of Practice and Substance Based on the Substance Over Form Principle

Abstrak

Exchange rate fluctuations are a major challenge in the international financial system, including in the context of Islamic economics. To overcome this, Islamic hedging instruments were developed as an alternative risk mitigation that still complies with sharia principles. However, the application of various contracts in the practice of Islamic hedging often raises debates about their suitability in substance. This research aims to analyze the contracts used in Islamic hedging using the fiqh rule of al-'ibrah fi al-'uqud li al-maqaṣid wa al-ma'ani, which assesses contracts based on their purpose and substantial meaning, not merely their formal form. This research uses a qualitative method through a literature study of DSN-MUI fatwas, fiqh literature, and hedging practices in Islamic financial institutions. The results of the analysis show that some contracts such as wa'ad, murabaḥah, and qardh in practice still deviate from maqaṣid sharia because they only adjust the external form without paying attention to the actual purpose of the contract. Therefore, it is necessary to reformulate the approach in developing Islamic hedging products to be more authentic, based on real needs, and in accordance with Islamic values substantially.