Shari‘ah Principles for Buying Dollars and Forex Trading
✍ Answered by: Shaykh ʿAbdul Wakeel Nāṣir ḥafiẓahullah
Is it permissible to purchase dollars, keep them, and later convert them into local currency when the rate increases?
Likewise, is it permissible to invest money in online platforms like Forex trading, where foreign currencies are bought and sold with the intention of earning profit when prices fluctuate — despite the possibility of both profit and loss?
Shari‘ah Basis:
During the time of the Prophet ﷺ, gold and silver were used as currencies. Since they were of different types, an unequal exchange was permissible, as long as the transaction was immediate and without deferment.
✔ Therefore, exchanging today's paper currencies (e.g., rupees for dollars) is permissible, provided:
The exchange is spot (hand to hand) — i.e., no delay.
No loan or credit is involved.
✘ It is not permissible to exchange the same currency with an increase or decrease, such as:
→ Buying new notes of the same currency at a higher price than their face value.
→ This falls under riba (usury) and is therefore haram.
In Forex trading:
✔ You invest money.
✔ A broker trades currencies on your behalf.
✔ Profit or loss depends on currency rate fluctuations.
Shari‘ah Concerns:
Ownership Condition:
This trading becomes impermissible when:
This makes Forex trading resemble:
➤ Qimār (gambling)
➤ Gharar (excessive uncertainty)
➤ Modern deception — as traders often don’t own the currency, and contracts lack transparency.
✔ Permissible:
Buying dollars or other currencies and selling them later at a higher price — as long as the transaction is spot-based and no debt or credit is involved.
✘ Impermissible or Doubtful:
Forex trading via online platforms, where there is no actual ownership, possession, and where uncertainty and speculative risk dominate, is suspicious and should be avoided.
✍ Answered by: Shaykh ʿAbdul Wakeel Nāṣir ḥafiẓahullah
✦ Question:
Is it permissible to purchase dollars, keep them, and later convert them into local currency when the rate increases?
Likewise, is it permissible to invest money in online platforms like Forex trading, where foreign currencies are bought and sold with the intention of earning profit when prices fluctuate — despite the possibility of both profit and loss?
✦ Answer:
➊ Buying and Holding Dollars
Shari‘ah Basis:
During the time of the Prophet ﷺ, gold and silver were used as currencies. Since they were of different types, an unequal exchange was permissible, as long as the transaction was immediate and without deferment.
✔ Therefore, exchanging today's paper currencies (e.g., rupees for dollars) is permissible, provided:
The exchange is spot (hand to hand) — i.e., no delay. No loan or credit is involved.➋ Same-Currency Exchange with Inequality
✘ It is not permissible to exchange the same currency with an increase or decrease, such as:
→ Buying new notes of the same currency at a higher price than their face value.
→ This falls under riba (usury) and is therefore haram.
➌ Shari‘ah Ruling on Forex Trading
In Forex trading:
✔ You invest money.
✔ A broker trades currencies on your behalf.
✔ Profit or loss depends on currency rate fluctuations.
Shari‘ah Concerns:
Ownership Condition:This trading becomes impermissible when:
- The currency is not actually possessed or owned by the trader.
- Trades are conducted only via numbers and digital speculation, without real ownership or delivery.
This makes Forex trading resemble:➤ Qimār (gambling)
➤ Gharar (excessive uncertainty)
➤ Modern deception — as traders often don’t own the currency, and contracts lack transparency.
❖ Summary
✔ Permissible:
Buying dollars or other currencies and selling them later at a higher price — as long as the transaction is spot-based and no debt or credit is involved.
✘ Impermissible or Doubtful:
Forex trading via online platforms, where there is no actual ownership, possession, and where uncertainty and speculative risk dominate, is suspicious and should be avoided.
