The Ruling on Trading in Currencies
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Question:
A type of speculation has become widespread in recent times, known as the currency basket. This involves a person giving a bank a sum of money, along with authorization for the bank to buy and sell currencies on his behalf, such as the dollar. As a result of this buying and selling, the person receives profits, but he is also exposed to loss. What is your opinion on this?
Answer:
What has reached us is what the questioner mentioned: that they give the bank, or someone other than the bank, currencies to trade for them. Trading in currencies is subject to the following distinction:
If it is through the path of riba, it is forbidden. If it is through the path of the Shari'ah, it is permissible. If one sells a currency for another currency hand-to-hand, there is no harm. For example, selling the dollar for the British pound, or the Egyptian pound, or the Saudi riyal, hand-to-hand; there is no harm. However, if it is for a deferred period, or not received in the meeting, this is not permissible. This is because currencies hold the status of money in the most correct opinion of the scholars, being of the same kind and occupying its place. And he (peace and blessings be upon him) said:Sunan Ibn Majah 2253Sahih (Darussalam).
And in the other wording:Musannaf Ibn Abi Shaybah 12:2507 meaning except hand-to-hand Musannaf Ibn Abi Shaybah 12:2507.
And so is his statement in the other hadith, (peace and blessings be upon him):.
Then he mentioned similarly regarding wheat, barley, dates, and salt, all hand-to-hand, equally. So the currencies that people deal in, if they sell some of them for others in a hand-to-hand transaction, there is no harm if they are of different kinds, such as the dollar for the British pound, or the Egyptian pound, or the dollar for the Jordanian dinar, or the Iraqi dinar, hand-to-hand; there is no harm.
As for a dollar for two dollars, that is not permissible; it is riba al-fadl. If he sold a dollar for two dollars for a deferred period, both types of riba are present in it: riba al-fadl and riba al-nasi'ah. Or if he sold, for example, ten Saudi riyals for eleven, or ten for twelve, even if hand-to-hand, this is riba al-fadl. If it is deferred, or delayed from the meeting, both types are present in it: riba al-fadl and riba al-nasi'ah.
A type of speculation has become widespread in recent times, known as the currency basket. This involves a person giving a bank a sum of money, along with authorization for the bank to buy and sell currencies on his behalf, such as the dollar. As a result of this buying and selling, the person receives profits, but he is also exposed to loss. What is your opinion on this?
Answer:
What has reached us is what the questioner mentioned: that they give the bank, or someone other than the bank, currencies to trade for them. Trading in currencies is subject to the following distinction:
If it is through the path of riba, it is forbidden. If it is through the path of the Shari'ah, it is permissible. If one sells a currency for another currency hand-to-hand, there is no harm. For example, selling the dollar for the British pound, or the Egyptian pound, or the Saudi riyal, hand-to-hand; there is no harm. However, if it is for a deferred period, or not received in the meeting, this is not permissible. This is because currencies hold the status of money in the most correct opinion of the scholars, being of the same kind and occupying its place. And he (peace and blessings be upon him) said:
Exchanging gold for gold is usury unless it is done on the spot.
الذهب بالذهب ربًا، إلا هاء وهاءAnd in the other wording:
Gold for silver is riba, except if it is hand-to-hand
الذهب بالفضة ربًا، إلا هاء وهاءSilver for silver is riba, except if it is hand-to-hand, and wheat for wheat is riba, except if it is hand-to-hand, and barley for barley is riba, except if it is hand-to-hand
والفضة بالفضة ربا إلا هاء وهاء، والبر بالبر ربا إلا هاء وهاء، والشعير بالشعير ربا إلا هاء وهاءAnd so is his statement in the other hadith, (peace and blessings be upon him):
Gold for gold is like-for-like, equal in amount, hand-to-hand, and silver for silver is like-for-like, equal in amount, hand-to-hand
الذهب بالذهب مثلًا بمثل سواءً بسواء يدًا بيد، والفضة بالفضة مثلا بمثل سواء بسواء يدا بيدThen he mentioned similarly regarding wheat, barley, dates, and salt, all hand-to-hand, equally. So the currencies that people deal in, if they sell some of them for others in a hand-to-hand transaction, there is no harm if they are of different kinds, such as the dollar for the British pound, or the Egyptian pound, or the dollar for the Jordanian dinar, or the Iraqi dinar, hand-to-hand; there is no harm.
As for a dollar for two dollars, that is not permissible; it is riba al-fadl. If he sold a dollar for two dollars for a deferred period, both types of riba are present in it: riba al-fadl and riba al-nasi'ah. Or if he sold, for example, ten Saudi riyals for eleven, or ten for twelve, even if hand-to-hand, this is riba al-fadl. If it is deferred, or delayed from the meeting, both types are present in it: riba al-fadl and riba al-nasi'ah.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.