Buying and Selling Currencies
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Question: Is it permissible to trade in currency for profit? For example, if I exchange 300 Libyan dinars, I get 1,000 US dollars. In Tunisian banks, 1,000 US dollars are 800 Tunisian dinars. If I then exchange the 800 Tunisian dinars for 800 Libyan dinars, we would have made a profit of 500 Libyan dinars. Is this lawful or forbidden?
Answer: Transactions involving the buying and selling of currencies are permissible, but on the condition of hand-to-hand exchange if the currencies are different. So, if one sells Libyan currency for American, Egyptian, or other currency hand-to-hand, there is no harm; for instance, if he buys dollars with Libyan currency hand-to-hand, he takes possession of it and he is given possession of it in the assembly. Or if he buys Egyptian or English currency, or other, with Libyan currency or other, hand-to-hand, there is no harm.
However, if it is deferred, it is not permissible. Likewise, if the hand-to-hand exchange does not take place in the assembly, it is not permissible; because, given the circumstances mentioned, it is considered a type of usurious transaction. Therefore, hand-to-hand exchange in the assembly is necessary if the currencies are different.
As for if they are of the same type, two conditions are necessary: equality and hand-to-hand exchange in the assembly; based on the saying of the Prophet (peace and blessings be upon him):Sahih Muslim 1587c. It was narrated by Muslim in his Sahih.
Currencies have the same ruling as what was mentioned: if they are different, excess is permissible with hand-to-hand exchange in the assembly. And if they are of the same type, such as dollars for dollars or dinars for dinars, hand-to-hand exchange in the assembly and equality are necessary. And success is from Allah.
Answer: Transactions involving the buying and selling of currencies are permissible, but on the condition of hand-to-hand exchange if the currencies are different. So, if one sells Libyan currency for American, Egyptian, or other currency hand-to-hand, there is no harm; for instance, if he buys dollars with Libyan currency hand-to-hand, he takes possession of it and he is given possession of it in the assembly. Or if he buys Egyptian or English currency, or other, with Libyan currency or other, hand-to-hand, there is no harm.
However, if it is deferred, it is not permissible. Likewise, if the hand-to-hand exchange does not take place in the assembly, it is not permissible; because, given the circumstances mentioned, it is considered a type of usurious transaction. Therefore, hand-to-hand exchange in the assembly is necessary if the currencies are different.
As for if they are of the same type, two conditions are necessary: equality and hand-to-hand exchange in the assembly; based on the saying of the Prophet (peace and blessings be upon him):
Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, and salt by salt, like for like and equal for equal, payment being made hand to hand. If these classes differ, then sell as you wish if payment is made hand to hand.
الذهب بالذهب، والفضة بالفضة، والبر بالبر، والشعير بالشعير، والتمر بالتمر، والملح بالملح مثلًا بمثل، سواءً بسواء، يدًا بيد، فإذا اختلفت هذه الأصناف، فبيعوا كيف شئتم إذا كان يدًا بيدCurrencies have the same ruling as what was mentioned: if they are different, excess is permissible with hand-to-hand exchange in the assembly. And if they are of the same type, such as dollars for dollars or dinars for dinars, hand-to-hand exchange in the assembly and equality are necessary. And success is from Allah.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.