Buying and Selling Currencies
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The first and second questions of the fatwa number ( 3037 )
Q1: You know that among the commercial transactions of people, and specifically between them now, is the buying and selling of currencies
with one another. For example, the dollar is sold for the riyal, the riyal is sold for the British pound, and the British pound is bought with the Kuwaiti dinar, and so on. It is observed that each currency has a selling price and a different buying price. Regarding the local currency, which is the riyal for the Kingdom, if we wanted, for example, to sell the dollars in our possession to one of our money changers to buy them at a price of (3.25) three riyals and twenty-five halalas, but if we wanted to buy dollars from him, he would sell us one dollar at a price of (3.30) three riyals and thirty halalas, meaning a difference of five halalas between the buying and selling transactions. In light of this existing practice, we would like to ask Your Eminence about the following: A- Is the aforementioned transaction valid and permissible from the Sharia perspective, and can we call it a sale? B- If this transaction is permissible, what is the evidence that distinguishes it from ribawi (usurious) monies in which increase is not permissible when exchanging them, as is not hidden from Your Eminence?
Vol. 1 : A- The transaction mentioned is a contract involving two ribawi items, and it is permissible if it is hand-to-hand, even if the values differ due to a difference in type; for it is established from the Prophet (peace and blessings be upon him) that he said:Sahih Muslim 1584a Banknotes represent the two currencies: gold and silver, and in what was mentioned in
the question, the types are different, so disparity is permissible in it; because every paper currency is considered an independent type according to the state that issues it, but immediate exchange is obligatory in it, due to the prohibition of the Prophet (peace and blessings be upon him) of selling an absent item of it for a present one, and this contract is called currency exchange, which is a type of sale. B- The same applies to all other ribawi items, such as wheat, barley, dates, and raisins; exchange is permissible in them if the type is the same, with the condition of similarity and immediate exchange in the assembly, and disparity is permissible in them if the types differ, provided the exchange is immediate, with no delay at the time of the contract, and disparity between the two values is absolutely forbidden, whether immediate or deferred, if the type is the same, and deferring the two ribawi values is absolutely forbidden, as is deferring one of them, except if one of the ribawi items is currency and the other is not currency, as in forward sale and sale for a period
Q1: You know that among the commercial transactions of people, and specifically between them now, is the buying and selling of currencies
with one another. For example, the dollar is sold for the riyal, the riyal is sold for the British pound, and the British pound is bought with the Kuwaiti dinar, and so on. It is observed that each currency has a selling price and a different buying price. Regarding the local currency, which is the riyal for the Kingdom, if we wanted, for example, to sell the dollars in our possession to one of our money changers to buy them at a price of (3.25) three riyals and twenty-five halalas, but if we wanted to buy dollars from him, he would sell us one dollar at a price of (3.30) three riyals and thirty halalas, meaning a difference of five halalas between the buying and selling transactions. In light of this existing practice, we would like to ask Your Eminence about the following: A- Is the aforementioned transaction valid and permissible from the Sharia perspective, and can we call it a sale? B- If this transaction is permissible, what is the evidence that distinguishes it from ribawi (usurious) monies in which increase is not permissible when exchanging them, as is not hidden from Your Eminence?
Vol. 1 : A- The transaction mentioned is a contract involving two ribawi items, and it is permissible if it is hand-to-hand, even if the values differ due to a difference in type; for it is established from the Prophet (peace and blessings be upon him) that he said:
Do not sell gold for gold, except like for like, and don't increase something of it upon something; and don't sell silver unless like for like, and don't increase some thing of it upon something, and do not sell for ready money something to be given later.
لا تبيعوا الذهب بالذهب إلا مثلاً بمثل، ولا تشفوا بعضها على بعض، ولا تبيعوا الورق بالورق إلا مثلاً بمثل، ولا تشفوا بعضها على بعض، ولا تبيعوا منها غائبًا بناجزthe question, the types are different, so disparity is permissible in it; because every paper currency is considered an independent type according to the state that issues it, but immediate exchange is obligatory in it, due to the prohibition of the Prophet (peace and blessings be upon him) of selling an absent item of it for a present one, and this contract is called currency exchange, which is a type of sale. B- The same applies to all other ribawi items, such as wheat, barley, dates, and raisins; exchange is permissible in them if the type is the same, with the condition of similarity and immediate exchange in the assembly, and disparity is permissible in them if the types differ, provided the exchange is immediate, with no delay at the time of the contract, and disparity between the two values is absolutely forbidden, whether immediate or deferred, if the type is the same, and deferring the two ribawi values is absolutely forbidden, as is deferring one of them, except if one of the ribawi items is currency and the other is not currency, as in forward sale and sale for a period
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.