Conditions for the permissible dealing in hard currencies

19-7-2011 | IslamWeb

Question:

Is dealing in hard currencies permissible?

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Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu 'alyhi wa sallam, is His slave and Messenger.

 

The ninth resolution of the Council of the Islamic Fiqh (Jurisprudence) Academy, holding its third session in Amman, 1407 H, states: “Regarding Sharee'ah rulings governing paper money: Paper money is real money, possessing all the characteristics of value, and subject to the Sharee'ah rulings governing gold and silver vis-a-vis usury (and interest), Zakah [obligatory charity], Salam sales, and all other transactions.”

 

This means that paper money, like gold and silver, can be subject to Ribaa (usury or interest). Consequently, both excess and delay in payment are prohibited when you exchange two different sorts of a single country's currency. However, if the currencies are different, such as when you exchange currencies of different countries, only delay in payment and not excess, is prohibited. This is because each country's currency constitutes a dependent value. This means that exchange of a single kind of currency with one party paying in excess is prohibited. Moreover, delivery of payment has to be at the same time and place as receiving the bought currency. Nevertheless, when the kinds of currencies are different, it is lawful that the paid or received value of one currency exceeds the other but the condition of immediate exchange at the same time and place has to be fulfilled.

 

Nevertheless, dealing in currencies becomes unlawful if the government bans it for a certain known reason, as governments look at these issues from the perspective of public interest that may be unclear to some individuals. To end, dealing in currencies is lawful if it fulfils the aforementioned conditions. Otherwise, it is prohibited.

Allaah Knows best.