◈ Ruling on Exchanging Currencies on Credit with an Increase in Amount ◈
In the modern era, it is common to conduct transactions using paper currency due to its light weight, ease of transfer, and convenience in counting.
❖ Scholarly Disagreement:
Scholars differ on how to classify paper currency:
- Should it be linked with gold?
- Or with silver?
- Or considered like trade goods?
❖ Rājiḥ (Strongest) Opinion:
According to the preferred view:
✔ Paper currency is considered equivalent to gold and silver, i.e., a form of independent legal tender (نقد مستقل).
✔ However, different national currencies are treated as different types, just like gold and silver differ.
❖ Practical Implication:
Example:
- French currency is not the same as Moroccan, Algerian, or Tunisian currency.
- Thus, exchanging one currency for another is like exchanging gold for silver.
✅ Therefore, it is permissible to exchange currencies of different countries at different rates.
However, one strict condition applies:
The exchange must be hand to hand in the Majlis al-ʿAqd (session of the contract).
i.e., Both parties must take possession before parting ways.
❖ Permissible Increase (No Riba al-Faḍl):
If the exchange rate of a currency is 1,100 and it is sold in the market or bank for 1,200, 1,400, or even 3,000 —
there is no issue with this increase, because:
✔ Paper currency is not like a fixed metal standard (e.g., gold or silver).
✔ It is governed by supply and demand.
✔ Riba al-Faḍl (increase in same-kind barter) does not apply here.
❖ Prohibited Form – Riba al-Nasī’ah (Delayed Exchange):
The only forbidden transaction with paper currency is:
✖ Exchanging currencies on a delayed basis (credit) without immediate mutual possession.
Any delay in exchange between two currencies, even of different countries, falls under riba al-nasī’ah, which is ḥarām.
📚 Ibn ʿUthaymīn – Nūr ʿala al-Darb 28/245
