Discussion on some rulings regarding currency exchange and trade in currencies?
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The questioner : Some of the brothers, our Shaykh, asked this question about what the Shaykh says regarding trading in currency. He told him, the Shaykh says it is not permissible; this is a type of gambling. He said, well, what is the currency we are buying? It is currency for currency, this currency for one person and that for another. I told him, it is not for one person. This pound is not the value of the paper, but the value of the currency you deal in. On a paper basis, it is a piece of paper, but in terms of its benefit, the currency rises and falls. So the Shaykh says there is gambling in this, except for a need. He said, our need is sometimes that we are drivers on the route and we need large amounts. I told him, you exchange according to your need.
The Shaykh : He means his needs, meaning he trades.
The questioner : Trade? We told him, it is not trade. He says the car spends a lot, and our needs there are to repair the car, its parts, and such. This is the need, not trading. He said, we do not take paper currency to sell it; we do not trade in it. We exchange according to our need, but our need is a large amount, not a small one. We told him, you exchange according to your need. This is the prohibition of exchange.
Another questioner: A man currently has ten thousand Jordanian dinars that he owns. He hears the news that the dinar will fall, so he converted them all to US dollars. Let us suppose he bought them for how many dollars, for example?
The Shaykh : This is understood.
Another questioner: He made a profit of three after two years.
The Shaykh : The dollars did not go into his pocket; the dollar fell. And this question has been asked repeatedly and over and over.
Another questioner: But the fear is that the dinar will fall more than the dollar.
The questioner : You have changed the question from trade to a second matter, which is that you want to preserve the value of your money from, for example, the Jordanian dinar to the dollar.
Another questioner: It became a trade in its own right. So is it permissible?
The Shaykh : I say that a person exchanges for a need. As for buying in order to trade, whether a little or a lot, it is not permissible. We say, we are like this and like that. A person has, for example, Syrian currency. The Syrian here does not go on his own; he goes to buy from the Syrian and the French, and so on. He wants to live, he wants to convert this to Jordanian dinars. He has no change, this means it is for a need, because he is in need. But a person who buys the Syrian dinar hoping that the Syrian currency will improve, and then is surprised that it has fallen further and he has lost, this is gambling. I call it gambling. Well, what did you say just now about the Iraqi currency?
The questioner : This is a gamble, a hundred percent. But there is a question that differs.
The Shaykh : This is a hundred percent gamble. A beautiful and correct expression. There is a gamble that is not a hundred percent; there is a gamble of fifty out of a hundred, sixty out of a hundred. That is, when this person sees that the price of the US dollar is high, he converts his Jordanian currency to the US dollar. The US dollar has never fallen in history. It fell, that is one thing. The second thing is that you know that the US dollar, or the British pound, or any currency in the world, every country raises its currency and lowers it to support its economy, is that not correct?
The questioner : There is doubt in this matter.
The Shaykh : There is no doubt at all.
The questioner : The currency preserves its value according to the International Monetary Fund, according to its support for its currency from other currencies or from gold. That is, no country can raise the value of its currency, but it can lower the value of its currency, but it cannot raise it.
The Shaykh : What is this talk? This is strange talk from you, completely, because you consider yourself an expert in the subject. I know that France, in a recent period, lowered the value of the franc.
The questioner : It can lower its value, but raising it is not permissible; it cannot be raised.
The Shaykh : That is not reasonable.
The questioner : Every country can lower the value of its currency, but not raise it.
The Shaykh : I go along with you. I cannot argue with you now about the exception you are mentioning. I will argue with you on the point you agreed with me on, which is the devaluation. Why do they devalue? Is it not to consider their economy? Is it not to consider their benefit?
The questioner : Of course, this is certainly to support their economy.
The Shaykh : Stay with me. So, I was a man who was confident in the American currency, the dollars. I went, out of my foolishness and my commercial greed, and exchanged what I had, millions of Jordanian dinars, and bought dollars. And the economic policy of America suggested to them to lower the dollar. What happened to me?
The questioner : A loss.
The Shaykh : Well, the cause of this loss is the country in which I trusted the strength of its economy, and thereby the strength of its paper currency. Whereas if it had been gold, if it had been silver, no matter how much it fell, no matter how cheap it became, a person would not suffer a loss like any commercial commodity, because this is a currency with no value except a customary value between countries.
The questioner : Even gold, our professor, at one period, people lost large amounts in it.
The Shaykh : What did I tell you now?
The questioner : They used to measure gold by the dollar. It reached nine hundred dollars and suddenly fell to two hundred dollars. It was a huge loss in the year one thousand nine hundred eighty to one thousand nine hundred eighty-two.
The Shaykh : Allow me. Did it fall because of the cheapness of gold and the games of the countries?
The questioner : Of course, because of the games of the countries.
The Shaykh : So do not say the cheapness of gold.
The questioner : Of course, we conclude this talk from the games that happen in the financial markets.
Another questioner: Well, now, if I know that the Jordanian dinar is falling, I have correct information, I am not building on gambling, and I do not have the intention to trade in currency, but I have information that the Jordanian dinar is falling. So is it permissible, in order to preserve the value of my money, to convert it to dollars, on the basis that I feel, for example, that any other currency might reduce my loss in the case of preserving the value of the dinar?
The Shaykh : You have no way other than to buy gold, but as for paper currency.
Another questioner: Well, now, professor, do you know how they sell and buy in gold? Suppose I bought gold, suppose they measure it for us, the gold dealers. How do we measure the value of the gram? They raise it in the Jordanian dinar and lower it. On what basis? On the basis of the dollar. They come and say, for example, globally today the dollar in the ounce is four hundred dollars. Yesterday the gold ounce was four hundred dollars globally. They measure the value of gold in dollars. When the dollar falls, they measure the value of gold in dollars again. It falls with the value of the dollar. It always flies with the dollar.
The Shaykh : You are now, as the Shaykh mentioned, buying gold with your Jordanian dinars. So generally, you preserve your dinars with this gold better than if you bought dollars. This is clear, this is known.
Another questioner: Is it not the same thing if they measure it in dollars?
The questioner : And if they measure it in dollars, did you not say the dollar goes up and down now?
The Shaykh : I solve the problem, and I am not an economist. Do you imagine that even the strongest currency in the world could completely collapse and its value go away? Do you not imagine that?
Another questioner: This is certainly possible.
The Shaykh : Do you imagine gold losing its value?
Another questioner: No.
The Shaykh : That is it. And when you say that the ounce of gold became this price in dollars, this is the game we are talking about. It is that the strong country, when it is in its interest to raise the value of its currency, raises it. But it is not in the way you just mentioned; it does not help to raise it. It raises it in an economic way, is that not correct?
The questioner : Correct.
The Shaykh : We are paying attention now.
The Shaykh : And the deviation comes with deviation, but of course, not all deviations are in the same proportion. As we said earlier, Adnan said the Messenger of Allah (peace and blessings be upon him) prayed for those who shortened once, but he said. They said, O Messenger of Allah, and for those who shortened? He said
The questioner : Reassuring the heart.
The Shaykh : Hahaha, so our brother Adnan convinced me with this.
The Shaykh : He means his needs, meaning he trades.
The questioner : Trade? We told him, it is not trade. He says the car spends a lot, and our needs there are to repair the car, its parts, and such. This is the need, not trading. He said, we do not take paper currency to sell it; we do not trade in it. We exchange according to our need, but our need is a large amount, not a small one. We told him, you exchange according to your need. This is the prohibition of exchange.
Another questioner: A man currently has ten thousand Jordanian dinars that he owns. He hears the news that the dinar will fall, so he converted them all to US dollars. Let us suppose he bought them for how many dollars, for example?
The Shaykh : This is understood.
Another questioner: He made a profit of three after two years.
The Shaykh : The dollars did not go into his pocket; the dollar fell. And this question has been asked repeatedly and over and over.
Another questioner: But the fear is that the dinar will fall more than the dollar.
The questioner : You have changed the question from trade to a second matter, which is that you want to preserve the value of your money from, for example, the Jordanian dinar to the dollar.
Another questioner: It became a trade in its own right. So is it permissible?
The Shaykh : I say that a person exchanges for a need. As for buying in order to trade, whether a little or a lot, it is not permissible. We say, we are like this and like that. A person has, for example, Syrian currency. The Syrian here does not go on his own; he goes to buy from the Syrian and the French, and so on. He wants to live, he wants to convert this to Jordanian dinars. He has no change, this means it is for a need, because he is in need. But a person who buys the Syrian dinar hoping that the Syrian currency will improve, and then is surprised that it has fallen further and he has lost, this is gambling. I call it gambling. Well, what did you say just now about the Iraqi currency?
The questioner : This is a gamble, a hundred percent. But there is a question that differs.
The Shaykh : This is a hundred percent gamble. A beautiful and correct expression. There is a gamble that is not a hundred percent; there is a gamble of fifty out of a hundred, sixty out of a hundred. That is, when this person sees that the price of the US dollar is high, he converts his Jordanian currency to the US dollar. The US dollar has never fallen in history. It fell, that is one thing. The second thing is that you know that the US dollar, or the British pound, or any currency in the world, every country raises its currency and lowers it to support its economy, is that not correct?
The questioner : There is doubt in this matter.
The Shaykh : There is no doubt at all.
The questioner : The currency preserves its value according to the International Monetary Fund, according to its support for its currency from other currencies or from gold. That is, no country can raise the value of its currency, but it can lower the value of its currency, but it cannot raise it.
The Shaykh : What is this talk? This is strange talk from you, completely, because you consider yourself an expert in the subject. I know that France, in a recent period, lowered the value of the franc.
The questioner : It can lower its value, but raising it is not permissible; it cannot be raised.
The Shaykh : That is not reasonable.
The questioner : Every country can lower the value of its currency, but not raise it.
The Shaykh : I go along with you. I cannot argue with you now about the exception you are mentioning. I will argue with you on the point you agreed with me on, which is the devaluation. Why do they devalue? Is it not to consider their economy? Is it not to consider their benefit?
The questioner : Of course, this is certainly to support their economy.
The Shaykh : Stay with me. So, I was a man who was confident in the American currency, the dollars. I went, out of my foolishness and my commercial greed, and exchanged what I had, millions of Jordanian dinars, and bought dollars. And the economic policy of America suggested to them to lower the dollar. What happened to me?
The questioner : A loss.
The Shaykh : Well, the cause of this loss is the country in which I trusted the strength of its economy, and thereby the strength of its paper currency. Whereas if it had been gold, if it had been silver, no matter how much it fell, no matter how cheap it became, a person would not suffer a loss like any commercial commodity, because this is a currency with no value except a customary value between countries.
The questioner : Even gold, our professor, at one period, people lost large amounts in it.
The Shaykh : What did I tell you now?
The questioner : They used to measure gold by the dollar. It reached nine hundred dollars and suddenly fell to two hundred dollars. It was a huge loss in the year one thousand nine hundred eighty to one thousand nine hundred eighty-two.
The Shaykh : Allow me. Did it fall because of the cheapness of gold and the games of the countries?
The questioner : Of course, because of the games of the countries.
The Shaykh : So do not say the cheapness of gold.
The questioner : Of course, we conclude this talk from the games that happen in the financial markets.
Another questioner: Well, now, if I know that the Jordanian dinar is falling, I have correct information, I am not building on gambling, and I do not have the intention to trade in currency, but I have information that the Jordanian dinar is falling. So is it permissible, in order to preserve the value of my money, to convert it to dollars, on the basis that I feel, for example, that any other currency might reduce my loss in the case of preserving the value of the dinar?
The Shaykh : You have no way other than to buy gold, but as for paper currency.
Another questioner: Well, now, professor, do you know how they sell and buy in gold? Suppose I bought gold, suppose they measure it for us, the gold dealers. How do we measure the value of the gram? They raise it in the Jordanian dinar and lower it. On what basis? On the basis of the dollar. They come and say, for example, globally today the dollar in the ounce is four hundred dollars. Yesterday the gold ounce was four hundred dollars globally. They measure the value of gold in dollars. When the dollar falls, they measure the value of gold in dollars again. It falls with the value of the dollar. It always flies with the dollar.
The Shaykh : You are now, as the Shaykh mentioned, buying gold with your Jordanian dinars. So generally, you preserve your dinars with this gold better than if you bought dollars. This is clear, this is known.
Another questioner: Is it not the same thing if they measure it in dollars?
The questioner : And if they measure it in dollars, did you not say the dollar goes up and down now?
The Shaykh : I solve the problem, and I am not an economist. Do you imagine that even the strongest currency in the world could completely collapse and its value go away? Do you not imagine that?
Another questioner: This is certainly possible.
The Shaykh : Do you imagine gold losing its value?
Another questioner: No.
The Shaykh : That is it. And when you say that the ounce of gold became this price in dollars, this is the game we are talking about. It is that the strong country, when it is in its interest to raise the value of its currency, raises it. But it is not in the way you just mentioned; it does not help to raise it. It raises it in an economic way, is that not correct?
The questioner : Correct.
The Shaykh : We are paying attention now.
The Shaykh : And the deviation comes with deviation, but of course, not all deviations are in the same proportion. As we said earlier, Adnan said the Messenger of Allah (peace and blessings be upon him) prayed for those who shortened once, but he said
O Allah, forgive those who shaved their heads. O Allah, forgive those who shaved their heads. O Allah, forgive those who shaved their heads.
اللهم إغفر للمحلقين اللهم إغفر للمحلقين اللهم إغفر للمحلقينand those who shortened their hair
والمقصرينThe questioner : Reassuring the heart.
The Shaykh : Hahaha, so our brother Adnan convinced me with this.