Purchasing currency through what is called an option contract
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Fatwa number ( 11409 )
Q: Is it permissible to purchase foreign currencies through what is called: (an option right contract) where the purchase process is carried out as follows: The buyer agrees with a bank regarding the option right granted by the bank to the buyer (the beneficiary). The beneficiary pays a fee or premium to the seller (the bank) at the time of entering into the option right contract to purchase the currency. During the agreed-upon period, the buyer
the beneficiary may pay the agreed-upon price and purchase the currency, regardless of the prevailing market price at the time of the actual purchase. Also, the buyer is not obligated to purchase the currency, which is the nature of this contract. His obligation is limited, in the case where he does not wish to complete the purchase, to paying the premium he paid at the beginning of the contract in exchange for being granted the option right, the value of which will not be refunded, whether the transaction is completed or not. Example: An option right contract to purchase 100,000 marks at a price of 2.20 riyals per mark, with an option period of 3 months, and an option fee of 5 halalas paid to the bank per mark. First scenario: During the above period, the price of the mark rose to 2.40 riyals. The beneficiary exercised the option right and paid the value of the marks at the agreed and fixed price of 2.20, regardless of the prevailing market price of the mark. Second scenario: The price of the mark fell to 2.00 riyals. In this case, the beneficiary did not exercise the option right during the contract period. The contract ends when its term expires, and the seller (the bank) retains the option right fee (5 halalas), which is not refunded to the buyer/beneficiary, as we have mentioned.
A : It is not permissible to sell and purchase currencies with one another except if the exchange takes place in the contract session, and if they are of the same type, similarity is required
along with the exchange. It is established in the two Sahihs and others from Abu Sa'id al-Khudri (may Allah be pleased with him) that the Messenger of Allah (peace and blessings be upon him) said:Sahih Muslim 1584a , so his statement (peace and blessings be upon him): "and do not sell any of it absent for present" indicates the condition of exchange in the contract session and the invalidity of an option sale.
Q: Is it permissible to purchase foreign currencies through what is called: (an option right contract) where the purchase process is carried out as follows: The buyer agrees with a bank regarding the option right granted by the bank to the buyer (the beneficiary). The beneficiary pays a fee or premium to the seller (the bank) at the time of entering into the option right contract to purchase the currency. During the agreed-upon period, the buyer
the beneficiary may pay the agreed-upon price and purchase the currency, regardless of the prevailing market price at the time of the actual purchase. Also, the buyer is not obligated to purchase the currency, which is the nature of this contract. His obligation is limited, in the case where he does not wish to complete the purchase, to paying the premium he paid at the beginning of the contract in exchange for being granted the option right, the value of which will not be refunded, whether the transaction is completed or not. Example: An option right contract to purchase 100,000 marks at a price of 2.20 riyals per mark, with an option period of 3 months, and an option fee of 5 halalas paid to the bank per mark. First scenario: During the above period, the price of the mark rose to 2.40 riyals. The beneficiary exercised the option right and paid the value of the marks at the agreed and fixed price of 2.20, regardless of the prevailing market price of the mark. Second scenario: The price of the mark fell to 2.00 riyals. In this case, the beneficiary did not exercise the option right during the contract period. The contract ends when its term expires, and the seller (the bank) retains the option right fee (5 halalas), which is not refunded to the buyer/beneficiary, as we have mentioned.
A : It is not permissible to sell and purchase currencies with one another except if the exchange takes place in the contract session, and if they are of the same type, similarity is required
along with the exchange. It is established in the two Sahihs and others from Abu Sa'id al-Khudri (may Allah be pleased with him) that the Messenger of Allah (peace and blessings be upon him) 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 بناجز
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.