Foreign Currency Exchange and the Islamic Perspective

  • 12 Jan 2013 08:09:06
  • France


What is the Mas’ala of buying foreign currency? The Shurooth?

Also, if I loan $50 to someone with the promise that he will repay me R500.00 after one month, is this permissible?


In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

The conditions for the validity of exchanging currencies are:

1. If there are two same currencies, then it is permissible to exchange them for each other provided that both the counter values are equal. An excess on either counter values is Ribaa and interest, hence prohibited. For example: $50 in exchange of $50.

2. If there are two different currencies on cash, then they may be exchanged with excess on one counter value or both counter values with mutual agreement. For example: $50 in exchange of R500.00.

3. If there are two different currencies being exchanged on cash, then it is permissible to exchange them on any rate on condition that both the transacting parties are in agreement of the rate. For example: $50 in exchange of R500.00 at a rate of $10 to the Rand.

4. If there are two different currencies being exchanged on credit, then it is permissible to exchange them provided that the rate of exchange is on the market rate and not on any agreed upon rate. For example: $50 in exchange of R400.00 payable after three months on the current market rate of $8 to the Rand. (Contemporary Fatawa, Pg.141, Idara)

2. According to Shariah, it is incumbent that the debtor return the actual amount/value owed to the creditor.[1]

Therefore, if person A loans person B $50 on condition that he repay’s person A R500.00, that will not be permissible since the exchange rate continuously fluctuates and person A is not guaranteed of being paid the full market value of $50.

As an alternative, we advise that person B (debtor) pays the market value of the loaned amount ($50) to person A (creditor) on the day of paying out the debt.

and Allah Ta'ala Knows Best

(Mawlana) Ismail Desai
Student: Darul Ifta

Further References:

1 اما معناه الشرعي: فهو عقد مخصوص يرد علي دفع و اعطاء المال المثلي لآخر علي أن يرد مثله (ج 3، ص 76، المبحث الأول في تعريف القرض و ركنه، درر الحكام، العلمية)

Disclaimer: The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any organizations to which he may be affiliated with. The opinions and educational information proffered in this communication are based on the jurisprudential understanding and available knowledge of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another scholar may reach different juristic inferences and conclusions to those as expressed by the author. Whilst every effort has been taken to ensure total academic integrity and honesty, the author is open to corrective measures based on sound academics and juristic inferences. The Shari’ah ruling given herein is based specifically on the specific scenario in question. The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage. This answer may not be used as evidence in any court of law without prior written consent from the author. Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.