Is Forex halal or Haram in Islam?

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Forex is one of the most prevailing trading platforms nowadays. It has spread widely in South Africa, which has a large Muslim community. Hence, the question arises, is Forex trading halal or haram in Islam? Unfortunately, there is no straight answer to this question. In this article, we will go over both sides of this debate and then conclude for our readers.

Reasons behind the confusion of Muslims about Forex 

A person might wonder why is Forex trading is an issue for Muslims. The reason behind their confusion is Islamic economic laws. Islam is a 1400 years old religion. It provides a complete guide of living to its followers, including financial matters. However, the recent digital financial matters are a little complex. Islamic scholars are also divided in their opinions about the interpretation of Islamic laws.

Reasons to believe that Forex trading is Haram.

Forex trading has several features which are contradictory to Islamic laws. Islam prohibits Riba (interest), future trading, and usury.

Forex trading is largely based on interest and future trading. Forex brokers offer huge amounts of interest over trading and earning profits. Future trading also offers estimation/prediction trades over currencies. For example, traders can earn a profit by estimating the price of a currency pair.

Moreover, Islam requires its followers to trade in only the commodities they own. Hence, in Forex trading, when a person doesn’t have ownership of the currency pairs, Islam deems it Haram.

The Quran states, ” God deprives interest of all blessings but blesses charity; He loves not the ungrateful sinner.”

That is why most traders are skeptical of Forex trading. Islamic scholars also prohibit Forex trading based on these reasons.

Reasons to believe that Forex trading is Halal.

Several scholars and traders think that Forex trading is Halal. Forex trading offers Islamic accounts through many brokers. Islamic accounts do not have any interests. Hence, several scholars certify. Forex trading is permissible.

Here is a fatwa issued by Sheikh Ibn Bazz, “Dealing in currency, buying and selling, is permissible, but that is subject to the condition that the exchange is hand-to-hand if the currencies are different. For example, suppose a person sells Libyan currency for American or Egyptian or whatever currency hand to hand. In that case, there is nothing wrong with that, such as if he buys dollars for Libyan currency hand to hand, exchanging it in one sitting, or he buys Egyptian or English currency, etc. for the Libyan or whatever currency hand to hand, there is nothing wrong with that. But if there is a delay, then it is not permissible, and if the exchange is not done in the same sitting, it is not permissible because it falls under the category of riba-based transaction. So the exchange must take place in the same sitting, hand to hand if the currencies are different.”

Nowadays, almost every broker has an option of an Islamic account for Muslim traders. The terms and conditions of these accounts are very clear and easy to understand.

Summary

So, forex trading in south africa is halal according to the fatwas of prestigious Islamic scholars. We advise you to trade in Islamic accounts only.

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