Author: Dr. Muhammad Zia-ur-Rahman A'zami (رحمه الله)
When dealing with different currencies, their exchange is permissible under the condition that the transaction is conducted on-the-spot with immediate handover.
For example, if Libyan currency is exchanged for US Dollars or Egyptian Pounds, and both parties exchange the currencies in the same sitting, handing them over immediately, then this transaction is permissible. For instance, if a person buys dollars with Libyan currency and both parties hand over the respective amounts during the contract session (majlis), there is no harm in it.
However, if the transaction is done on credit or delayed handover, it becomes impermissible. If either party fails to deliver the currency during the session, the transaction falls into the category of riba (usury) and is thus prohibited.
If both currencies are of the same type, then two conditions must be met for the transaction to be valid:
① The exchange must be equal in amount
② The currencies must be handed over in the same sitting
This is based on the Prophetic saying:
“Gold for gold, silver for silver, wheat for wheat, dates for dates, barley for barley, and salt for salt—equal for equal, and hand to hand. But if these categories differ, then sell as you wish, provided it is hand to hand.”
[Sahih Muslim, Hadith No. 1587/81]
Therefore, currencies are treated like these commodities. If the currencies are different, then inequality in amount is permissible as long as immediate exchange (taqabud) takes place in the same session. But if the currencies are of the same type (e.g., dollar for dollar, dinar for dinar), then equality and immediate handover are both required.
[Ibn Bāz, Majmūʿ al-Fatāwā wa al-Maqālāt: 19/171]
❖ Currency Exchange Regulations
When dealing with different currencies, their exchange is permissible under the condition that the transaction is conducted on-the-spot with immediate handover.
For example, if Libyan currency is exchanged for US Dollars or Egyptian Pounds, and both parties exchange the currencies in the same sitting, handing them over immediately, then this transaction is permissible. For instance, if a person buys dollars with Libyan currency and both parties hand over the respective amounts during the contract session (majlis), there is no harm in it.
However, if the transaction is done on credit or delayed handover, it becomes impermissible. If either party fails to deliver the currency during the session, the transaction falls into the category of riba (usury) and is thus prohibited.
If both currencies are of the same type, then two conditions must be met for the transaction to be valid:
① The exchange must be equal in amount
② The currencies must be handed over in the same sitting
This is based on the Prophetic saying:
“Gold for gold, silver for silver, wheat for wheat, dates for dates, barley for barley, and salt for salt—equal for equal, and hand to hand. But if these categories differ, then sell as you wish, provided it is hand to hand.”
[Sahih Muslim, Hadith No. 1587/81]
Therefore, currencies are treated like these commodities. If the currencies are different, then inequality in amount is permissible as long as immediate exchange (taqabud) takes place in the same session. But if the currencies are of the same type (e.g., dollar for dollar, dinar for dinar), then equality and immediate handover are both required.
[Ibn Bāz, Majmūʿ al-Fatāwā wa al-Maqālāt: 19/171]
