QUESTION:
Assalamu Alaikum,
Mufti,
My question today is based on if Forex Trading is Permissible in Islam?
I have been doing some research for myself but i need advice from you. From certain articles online it is said that the prophet pbuh said it was permissible to trade currencies once it is done immediately and at the current market price.
Now this brings us to trading on the forex market presently. when you trade you either buy or sell a currency pair at a price now that price will fluctuate influencing you to either buy or sell now that moment of buying or selling will come from your own idea or from charts being provided online you then place your money on the trade but lets say you enter at a certain price for buying but the market turns around you will be losing. it is something that is never guaranteed.
(like playing lotto etc you buy a ticket and you either win or lose)
when you enter a trade you either win or lose.
Sorry for the long email but it something i need some clarification on.
I am a revert so I need scholars advice to help me in making these decisions.
JazakAllah Kair
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ANSWER:
Wa Alaikum As Salaam,
Trading in currencies (foreign exchange) is permissible in Islam with the following:-
- The Transaction between the two parties must be done immediately without delay on any side.
- The two currencies that are traded in, must be exchanged on the spot without delay.
- Currencies traded in, must be actually owned and possessed by a person. When the currency exchange takes place, the actual delivery of currency (sold) by the seller must take place, and the actual taking possession of the currency by the purchaser must take place. Both parties must take possession of the currencies traded in, in the same sitting and there must be no delay on any one side.
- No element of interest must be present in the transaction.
The above conditions must be present for the validity of trading in currencies.
With respect to Forex trading via the internet, it is seen that some of the conditions laid in Islam for currency trading is not present. For example, when real/actual possession, ownership and delivery must take place, it is seen that in Forex Trading (via the internet), forex traders do not expect to take actual delivery of the currency they are buying, and they do not actually own the currency they are selling. They are simply speculating that the value of one will go up and the value of another will go down.
Similarly, while interest is totally prohibited in Islam, one finds that in Forex trading markets, interest is charged for not using the deal at the same day. In some cases, the agent sells something which he does not possess, and is forbidden in Islam.
Hence, in my opinion, Forex trading markets (via the internet) will not be permissible.
And Allah knows best
Mufti Waseem Khan
1/12/17