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Is forex forbidden in islam

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is forex forbidden in islam

Some Days, Family Wins. Some Days, Work Triumphs. Muslim Women Are Changing The Face Of Fashion. Forbidden the eyes of the Sharia, there is forbidden huge difference between trading what you have now islam what you might have later. Elsa Febiola Aryanti explains. Since all this involves money, trading and exchanging, how does Islam view it all? What kinds of foreign exchange transactions are acceptable in Islam? In short, foreign exchange, in the form of using money as a commodity, is not permitted in Islam. The Sharia places a clear difference between money and commodities. Under its tenets, money is strictly something with which we can exchange for goods and services. If money of different currencies is going to be exchanged, it should be done in equal values. It is also acceptable to pay the moneychanger or a bank for the service rendered, in case you are wondering. In a spot transactionone party promises to pay for a certain amount of currency from a second party within the same day or the next two days. So, broadly speaking, spot transactions use the price that a buyer expects to pay for a foreign currency almost immediately. For example, a friend has just returned from her holiday in England. When you agree to buy her British pounds at an official exchange rate, and you settle the amounts immediately, this is considered a forex transaction. In a forward transaction, one party agrees to exchange currencies with another party at a specific exchange rate, but with the transaction done in the future. The problem that the Sharia has with forward transactions is that the exchange rates are determined after having considered also islam interest riba levels of the currencies involved. Forward transactions are commonly used to reduce the risk of dealing with frequently fluctuating foreign exchange rates. To minimise the risk of fluctuating exchange rates, you agree to exchange a known amount islam, but you will pay for and receive the local currency in the future, by the time payment is due for your holiday home. In Islam, money should only be viewed as something used to buy goods or services. Money is not a commodity. Money may never be traded like commodities, and the practice of trading with or selling money using speculative steps and involving riba is forbidden in Islam, and is thus haram. For a foreign exchange transaction to be halal in Islam, it must not be speculative. The buying of British pounds from your friend is an example of a halal transaction, since you legitimately need the pounds for your trip to London. So, going back to how Islam views foreign exchange: The type that is permissible in Islam is the spot transaction, which is done on the spot or almost immediately, with the rate known to both parties and involves no speculation or interest rates. This article originally appeared in the July issue of Aquila Forex magazine. By Elsa Febiola AryantiWednesday, 25th February 4: SHARE TWEET PIN IT. There are generally two kinds of foreign forex transactions: Additional reporting by Ryan Hardy. About the Company Terms Of Service Personal Data Protection Forbidden to Aquila Style Contact Us.

Is the stock market permissible

Is the stock market permissible is forex forbidden in islam

5 thoughts on “Is forex forbidden in islam”

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