Foreign Exchange or commonly abbreviated as foreign currency is the currency used or recognized in international trade.
In another sense, foreign exchange is the exchange or conversion of one country’s currency with another country.
For example, you can exchange rupiah money with dollars at the prevailing selling price at that time.
The rise and fall in the value of foreign exchange can be caused by many things. One of them is now afflicting the world, the corona virus or covid-19.
In the midst of this corona virus outbreak, an economic downturn occurred with the weakening of the rupiah.
On March 20 2020, the value of the rupiah against the dollar had reached Rp. 16,000 per 1 dollar. This figure is almost close to the same value when the crisis.
Of course this condition is not expected to continue to occur. We all hope that the corona virus can quickly subside and the economy can improve soon.
Well, apart from these conditions how does Islam perceive the sale and purchase of foreign exchange?
In this article, we will discuss foreign exchange trading and how Islam views it.
Can I buy or sell this?
Also Read: This is the Difference between the Mudharabah, Murabahah and Musyarakah Covenants
Islamic Views of Foreign Exchange
The concept of buying and selling currencies or foreign exchange in Islam is called Al-Sharf . Basically, buying and selling is allowed in Islam.
Referring to the argument from the hadith of the Prophet SAW. Rasulullah SAW said:
الذهب بالذهب والفضة بالفضة والبر بالبر والشعير بالشعير والتمر بالتمر والملح بالملح مثلا بمثل, سواء بسواء, يدا بيد, فإذا اختلفت هذه الأصناف فبيعوا كيف شئتم إذا كان يدا بيد.
” (Sell) gold with gold, silver with silver, wheat with wheat, poetry with poetry, dates with dates, and salt with salt (on condition that it must be) the same and the same kind and in cash. If the types are different, sell as you like if done in cash . ”
- Muslim, Abu Daud, Tirmizi, Nasa’i, and Ibn Majah, with Muslim texts from ‘Ubadah bin Shamit.
The al-sharf agreement is also allowed to refer to the fatwa DSN 28 / DSN-MUI / III / 2002 concerning Currency Trading (al-Sharf).
The issuance of this fatwa is because it considers that in a number of activities to meet various needs, it is often necessary to trade and sell currencies ( al-sharf ), both between similar currencies and between currencies of different types.
Also Read: Buying and Selling in Islam (Understanding, Proof, Terms and Contemporary)
Allows to buy and sell foreign currencies or foreign currencies based on the following conditions:
- Not for speculation (chancy)
- There is a need for a transaction or just in case (deposit)
- If the transaction is carried out on a similar currency then the value must be the same and in cash ( at-taqabudh).
- If there are different types, then it must be done at the exchange rate (exchange rate) in effect at the time the transaction is made and in cash.
In the mechanism of buying and selling, transactions must be done by the spot method.
What is the spot method?
The method or spot transaction is a transaction of buying and selling foreign exchange (foreign exchange) for delivery at the time (over the counter) or settlement no later than two days.
So buying and selling must be done in cash and on that day based on the prices prevailing on that day.
Transactions that are forward, swap and option are prohibited in Islam.
Also Read: Forex Trading Laws In Islam
Thus the explanation of the sale and purchase of foreign exchange in the view of Islam. In the end this sale and purchase is permitted in Islam on condition that it must be done in cash and on the same day.
Hopefully this explanation can add insight into Islam, especially in terms of the al-sharf contract