Currency Differences in Loans and Zakah
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Question: If I have a friend, for example, in a country outside the one where I reside, and I need money from him, is it permissible for me to take it in the currency of my country and repay him in the currency of his country? And does the currency difference affect the payment of zakah, such as if my balance is in dollars, for example, and I want to pay the zakah in a currency with a lower value than the dollar, even in the same country? Is this permissible or not?
Answer: As for the issue of loans, where you borrow a sum of money from a person in one currency and then repay it in another currency, if this is in the category of currency exchange, there is no harm in it. It is permissible to exchange the debt in your liability and pay your creditor or lender in another currency through exchange. There is no harm in this.
Question: You mean with a currency difference?
Answer: If there is an increase in the loan, and this increase
is stipulated, then it is not permissible, because it becomes a loan that yields benefit. However, if this increase is a voluntary gift from the borrower, without the lender stipulating it, and it is merely a kindness from the borrower, in the sense of rewarding the favor, then there is no harm in it. The Prophet (peace and blessings be upon him) used to borrow, and he used to increase in the repayment, and he said (peace and blessings be upon him).
Question: If my friend is in Egypt and I am here, and he gave me a sum of money in Saudi riyals, and I want to repay him in Egyptian pounds, what is the ruling?
Answer: If it is according to its exchange rate in Egyptian pounds, exactly equivalent, there is no objection to it.
Question: For example, the Egyptian pound is four riyals?
Answer: At whatever price, there is no harm in that, because this is in the category of currency exchange.
Question: What about zakah?
Answer: As for zakah, the zakah of every wealth is obligatory from its own kind. So the zakah of dirhams is dirhams, the zakah of grains is from grains, and the zakah of livestock is from livestock, and so on. It is permissible to exchange the money—for example—that you owe zakah on into other money. There is no objection to that in the category of currency exchange, provided that the conditions of exchange are met, the possession is exchanged, and there is no delay or postponement. There is no objection to that.
Question: For example, it is not permissible for me to pay zakah on, say, one hundred dollars with two and a half riyals, on the basis that it is one hundred riyals, for example. Do I estimate it by what it equals at its market price?
Answer: If dirhams become obligatory upon you, it is permissible to pay them out in another currency according to what they equal, and what their exchange rate and market price are at that time.
Answer: As for the issue of loans, where you borrow a sum of money from a person in one currency and then repay it in another currency, if this is in the category of currency exchange, there is no harm in it. It is permissible to exchange the debt in your liability and pay your creditor or lender in another currency through exchange. There is no harm in this.
Question: You mean with a currency difference?
Answer: If there is an increase in the loan, and this increase
is stipulated, then it is not permissible, because it becomes a loan that yields benefit. However, if this increase is a voluntary gift from the borrower, without the lender stipulating it, and it is merely a kindness from the borrower, in the sense of rewarding the favor, then there is no harm in it. The Prophet (peace and blessings be upon him) used to borrow, and he used to increase in the repayment, and he said (peace and blessings be upon him)
The best of you are those who are best in repaying their debts
خيركم أحسنكم قضاءًQuestion: If my friend is in Egypt and I am here, and he gave me a sum of money in Saudi riyals, and I want to repay him in Egyptian pounds, what is the ruling?
Answer: If it is according to its exchange rate in Egyptian pounds, exactly equivalent, there is no objection to it.
Question: For example, the Egyptian pound is four riyals?
Answer: At whatever price, there is no harm in that, because this is in the category of currency exchange.
Question: What about zakah?
Answer: As for zakah, the zakah of every wealth is obligatory from its own kind. So the zakah of dirhams is dirhams, the zakah of grains is from grains, and the zakah of livestock is from livestock, and so on. It is permissible to exchange the money—for example—that you owe zakah on into other money. There is no objection to that in the category of currency exchange, provided that the conditions of exchange are met, the possession is exchanged, and there is no delay or postponement. There is no objection to that.
Question: For example, it is not permissible for me to pay zakah on, say, one hundred dollars with two and a half riyals, on the basis that it is one hundred riyals, for example. Do I estimate it by what it equals at its market price?
Answer: If dirhams become obligatory upon you, it is permissible to pay them out in another currency according to what they equal, and what their exchange rate and market price are at that time.