Fatwa ID: 06508

 

Answered by: Maulana Yūsuf Badāt

 

Question:

 

Is forex trading permissible?

 

 

In the name of Allah, the Most Gracious, the Most Merciful

 

Answer:

 

If by forex you refer to the exchange of currencies then this is permissible with two primary foundational conditions:

 

1. Taking possession of the currencies (such as gold and silver) on the spot, at the time of the transaction before separating. At least one party must take possession. If both parties agree to defer payment for each other, the transaction is Islamically unlawful.

 

1. The currencies (commodities) that are being exchanged should be different on both sides. Trading or exchanging the same currency with a disparity of an amount for one party is Islamically prohibited, as this constitutes ribā (usury).

 

It should be noted that the notes (bills) of currency of one country compared to another (such as Canadian and American dollars), and exchanging them is permissible with only the condition that at least one party takes possession of the exchanged currency on the spot of the transaction prior to separating.

 

In a specific country exchanging a cheque (document) for money as well as exchanging notes of currency for loose change of the same country is permissible provided there is no disparity in amount for one party. In this situation, there is no requirement for taking possession on the spot. – (See: Rad Al-Muḥtār, Vol 5, Page 175, Dār Al-Fikr¹, Al-Iqtiṣād Al-Islāmīy Al-Ma’ahad Al-Urubīy Page 35)²

 

If you refer to the global forex trade where innocent traders are defrauded with a [false] promise of expecting lucrative high profits in the foreign exchange market, then this is impermissible as it results in substantial loss of wealth and deceptive fraudulent activities.

 

“Allāh has permitted trade and has forbidden interest.” – (Qur’ān 2:275)³

 

“Allāh’s Messenger (peace and blessings be upon him) forbade the sale of gold for gold, and silver for silver except that it be equal for equal [in amount], and commanded us to buy silver for gold as we desired [in disparity] and buy gold for silver as we desired. A person asked him [about the nature of payment], whereupon he said, “It is to be made on the spot. This is what I heard [from Allāh’s Messenger (peace and blessings be upon him)].” – (Ṣaḥīḥ Muslim 1590)⁴

 

“Dates can be exchanged for dates, wheat for wheat, barley for barley, salt for salt, like for the like. Payment [must] be made on the spot. He who made an addition or demanded an additional amount [on one side of the transaction], in fact, has dealt in usury except in the case where the commodities differ [on either side of the transaction].” – (Ṣaḥīḥ Muslim 1588)⁵

 

 

 

Only Allāh knows best

Written by Maulana Yūsuf Badāt

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham

 

 

 

 

 

 

1 أَنَّ هَذَا مِمَّا لَمْ يَدْخُلْهُ الْقَدْرُ الشَّرْعِيُّ كَالسَّيْفِ وَالسَّيْفَيْنِ وَالْإِبْرَةِ وَالْإِبْرَتَيْنِ فَجَوَازُ التَّفَاضُلِ لِعَدَمِ دُخُولِ الْقَدْرِ الشَّرْعِيِّ فِيهِمَا وَيَحْرُمُ النَّسَاءُ لِوُجُودِ الْجِنْسِ – كتاب الدر المختار وحاشية ابن عابدين رد المحتار ج٥ / ص ١٧٥ دار الفكر

 

2 بيع الثمن بالثمن نوع من البيوع في معناها العام ولكن يختص دونها في ان محله النقود وهو مشروع جائز رفعا للحرج وله احكام شرعية لا بد من مراعاتها عند التعامل به – الاقتصاد الإسلامي المعهد الاروبي ص ٣٥

 

3 وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا – البقرة ٢٧٥

 

4 حَدَّثَنَا عَبْدُ الرَّحْمَنِ بْنُ أَبِي بَكْرَةَ عَنْ أَبِيهِ قَالَ نَهَى رَسُولُ اللَّهِ صلى الله عليه وسلم عَنِ الْفِضَّةِ بِالْفِضَّةِ وَالذَّهَبِ بِالذَّهَبِ إِلاَّ سَوَاءً بِسَوَاءٍ وَأَمَرَنَا أَنْ نَشْتَرِيَ الْفِضَّةَ بِالذَّهَبِ كَيْفَ شِئْنَا وَنَشْتَرِيَ الذَّهَبَ بِالْفِضَّةِ كَيْفَ شِئْنَا قَالَ فَسَأَلَهُ رَجُلٌ فَقَالَ يَدًا بِيَدٍ فَقَالَ هَكَذَا سَمِعْتُ – رواه مسلم ١٥٩٠

 

5 التَّمْرُ بِالتَّمْرِ وَالْحِنْطَةُ بِالْحِنْطَةِ وَالشَّعِيرُ بِالشَّعِيرِ وَالْمِلْحُ بِالْمِلْحِ مِثْلاً بِمِثْلٍ يَدًا بِيَدٍ فَمَنْ زَادَ أَوِ اسْتَزَادَ فَقَدْ أَرْبَى إِلاَّ مَا اخْتَلَفَتْ أَلْوَانُهُ – اخرجه مسلم ١٥٨٨