What is the ruling on trading in currency?

The questioner : The other question is about... hard currency. For years... a meeting with some scholars... in Algeria... waiting for a turn of five years... to be able to buy a car. Some people, for example, have... in Europe, so they, for example, tell them: give us, for example, ten thousand French francs.

The Shaykh : ... .

The questioner : Ten thousand French francs... and we give you in Algeria twenty thousand, for example, or thirty thousand Algerian dinars... the currency difference...?

The Shaykh : My opinion on the matter is that trading in currency is not permissible except within the limits of dire necessity. That is, when the currency fluctuates, one sells and buys and trades in it; this is not permissible. But within the limits of dire necessity, there is no objection. The situation you are asking about is among the cases... if there is harm... otherwise, no! The reason for this is that paper currency is known to all people to have no intrinsic value; it has only customary value. This customary value was previously backed by a specific proportion of gold; meaning, any person in any country who possesses some of these paper notes has the right to take the corresponding amount of gold for the proportion assigned to that currency. The principle in the Shari'ah is that gold is exchanged like for like, hand to hand; no excess is permissible at all. Now, this paper currency goes up and down every day in price. What is the equivalent of this rise and fall, when gold is gold and does not rise or fall? Gold for gold does not rise or fall, whereas this paper currency is rising and falling. Even the strongest currencies, the American, English, and Japanese, for example, are also rising and falling. But for weak countries, the drop is a terrible picture. The example is clear: the Iraqi dinar and the Jordanian dinar. I knew it... I knew the dinar when I came here and settled; the Iraqi dinar was more expensive than the Jordanian dinar.

Another questioner : The dinar for ten...

The Shaykh : Yes, now three Iraqi dinars, what do you buy them with? A Jordanian dinar. The Syrian pound, when I came here, the Jordanian dinar was ten Syrian pounds. Now it is twenty pounds.

Another questioner : Twenty-nine pounds.

The Shaykh : How much?

Another questioner : Twenty-nine pounds.

The Shaykh : Twenty-nine! What is this? What is the reason? The reason is the trading game between the big countries and the small ones. America, for example, when it is in its interest to issue the dollar, it supports it, and the opposite is exactly the opposite; therefore, the Muslim does not deal in trading paper currency for this reason except within the limits of dire necessity.

Another questioner : ... dire necessity.

The Shaykh : A person estimates it; dire necessity is not defined for all people.

Another questioner : Who spends it at that time?

The Shaykh : How?

The questioner : The one who spends the currency at that time, is he a money changer so that he takes...?

The Shaykh : Do not worry about who will spend it; you are imagining that you are living in an Islamic society.

Another questioner : ... .

The Shaykh : You are imagining that you are living in an Islamic society; when you imagine the Islamic society... the whole problem, is it clear or not?

Another questioner: Is it clear?

Another questioner : Of course, we are living now in a non-Islamic society?

The Shaykh: Of course.

Another questioner : Okay; what is our situation, I mean...?

The Shaykh : But when you mention that you are living in an Islamic society.

Another questioner: Of course... .

The Shaykh : May Allah forgive you! When you mention that you are living in a non-Islamic society, you must mention something else; either you are a stranger in it or you are close to it, so adopt what pleases you. What do you want to adopt?

Another questioner : That I be a stranger!

The Shaykh : Okay; he is a stranger! [Everyone laughs!]

The questioner : Our Shaykh, now the story of this money changing, the story of money changing, now I have a check for money changing, before I go down to the town and pay for transportation and delay myself, I passed by a man here who has a money changing shop, so I gave it to him with a discount of such a percentage according to the value of the check. Is this method permissible?

The Shaykh : A discount meaning that he bought it for less than if you had gone down there?

Another questioner: Of course.

The questioner : Yes, and I know if I wanted to go down there, it would cost me less than a third between transportation and going and coming back.

The Shaykh : That is dire necessity, as we said earlier.

Another questioner : But a question.

The questioner : No problem, there is a matter, may Allah be pleased with you. Now, my Shaykh, the situation of the Egyptian pound and the Jordanian dinar, is it like this?

The Shaykh : Do not trade, but do not trade.

The questioner : I do not want to trade.

The Shaykh : Now you will see.
Please proceed.

The questioner : Understood.
One day it was reported to me that the Egyptian pound would be thirty-one piastres, or thirty piastres, or twenty-nine piastres, and one day I find the Egyptian pound, what Allah willed!... thirty-four. So when... many of our Egyptian brothers, what do they do? When it reaches twenty-nine piastres, they go immediately quickly, and sometimes they benefit from the abundance of Jordanian dinars to convert it so that they benefit from the currency difference; is this permissible?

The Shaykh : I did not believe you!! I told you: do not trade before you finished your speech! I did not believe you!

The questioner : It is not permissible, I mean?

The Shaykh : No, it is not permissible for a person to intend it; because that is trading. What do these money changers do other than this, I mean? Do the money changers do anything other than this? Otherwise, they would go bankrupt; is that right or not?

The questioner: Correct.