Some Days, Family Wins. Some Days, Work Triumphs. Muslim Women Are Changing The Face Of Fashion. In the eyes of the Sharia, there is a huge difference between trading what you have now and what you might have later. Elsa Febiola Aryanti explains. Since all this involves money, trading and exchanging, how does Islam view it all?

Fatwa on Forex Trading, Forex Halal or Haram - Saudi Arabia Forex Trading

What kinds of foreign exchange transactions are acceptable in Islam? In short, foreign exchange, in the form of using money as a commodity, is not permitted in Islam. The Sharia places a clear difference between money and commodities. Under its tenets, money is strictly something with which we can exchange for goods and services. If money of different currencies is going to be exchanged, it should be done in equal values.

It is also acceptable to pay the moneychanger or a bank for the service rendered, in case you are wondering. In a spot transaction , one party promises to pay for a certain amount of currency from a second party within the same day or the next two days. So, broadly speaking, spot transactions use the price that a buyer expects to pay for a foreign currency almost immediately. For example, a friend has just returned from her holiday in England.

When you agree to buy her British pounds at an official exchange rate, and you settle the amounts immediately, this is considered a spot transaction. In a forward transaction, one party agrees to exchange currencies with another party at a specific exchange rate, but with the transaction done in the future.

Ruling on dealing in currencies in the FOREX system and paying fees for delaying the deal - urisofod.web.fc2.com

The problem that the Sharia has with forward transactions is that the exchange rates are determined after having considered also the interest riba levels of the currencies involved. Forward transactions are commonly used to reduce the risk of dealing with frequently fluctuating foreign exchange rates. To minimise the risk of fluctuating exchange rates, you agree to exchange a known amount today, but you will pay for and receive the local currency in the future, by the time payment is due for your holiday home.

In Islam, money should only be viewed as something used to buy goods or services.

Money is not a commodity. Money may never be traded like commodities, and the practice of trading with or selling money using speculative steps and involving riba is forbidden in Islam, and is thus haram. For a foreign exchange transaction to be halal in Islam, it must not be speculative.

The buying of British pounds from your friend is an example of a halal transaction, since you legitimately need the pounds for your trip to London. So, going back to how Islam views foreign exchange: The type that is permissible in Islam is the spot transaction, which is done on the spot or almost immediately, with the rate known to both parties and involves no speculation or interest rates.

sharia - Is buying or selling forex, commodities and stock indices halal in Islam? - Islam Stack Exchange

This article originally appeared in the July issue of Aquila Style magazine. By Elsa Febiola Aryanti , Wednesday, 25th February 4: SHARE TWEET PIN IT. There are generally two kinds of foreign exchange transactions: Additional reporting by Ryan Hardy. Lifestyle London Aims to Become Islamic Finance Hub Lifestyle For the love of God, spend your money. About the Company Terms Of Service Personal Data Protection Contribute to Aquila Style Contact Us.