Q: Is forex trading halaal or haraam? While I use an interest free account, I use a swipe free and no commission account. My broker says its 100% according to Islamic Shariah. Kindly tell me about it in detail.
As far as foreign currencies are concerned, both are regarded as unspecific commodities. Hence, both or at least one will have to be exchanged on the spot. If both are deferred, it will not be permissible. Hence, in the case of online forex, since both exchanges are deferred, this transaction is invalid and impermissible in Islam.
Furthermore, it appears that this type of trading is “imaginary” and figurative, because the trader does not own nor does he have at any time possession of the foreign currency that he is trading.
And Allah Ta’ala (الله تعالى) knows best.
Mufti Zakaria Makada
Checked & Approved:
Mufti Ebrahim Salejee (Isipingo Beach)