Forex transactions for Muslims
23-8-2004 | IslamWeb
My question is about on Online Forex Trading. My question is as follow with a little introduction on Forex. "Forex, or Foreign Exchange, is the simultaneous exchange of one country’s currency for that of another. We provide foreign exchange for the purpose of investor speculation. The investor wishes to purchase or sell one currency for another with the hope of making a profit when the value of the currencies change in favour of the investor, whether from market news or events that takes place in the world. Currencies are usually purchased by the lot, where the lot represents 100,000 units of the base currency. @Depending on whether the trader believes a currency pair will increase or decrease, the trader will either buy lots or sell lots of the pair and try to make a profit from market movement."
Now the normal accounts which are offered contains dealing with Interest. So I asked them for an account which does not have any relationship with Interest either in dealing with it or in consumption. They told me that they do provide accounts for Muslims.
Quote "In respect for the Muslim religion, FXCM is willing to extend a courtesy to Muslim clients whose religion prohibits them from paying/receiving interest. If you wish to trade interest-free you will incur an additional charge of $3 per lot traded (round-turn) on the regular FXCM account" I would like to know that would this Interest Free Account be Halaal?
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger. We ask Allaah to exalt his mention as well as that of his family and all his companions.
It is unlawful to deal with the company you mentioned in any transaction that includes Ribaa. However, if this company provides a system peculiar to Muslims and which meets Islaamic requirements for lawful transactions, then it is permissible to deal with it within this scheme.
Also, there is no objection that this company takes a fixed amount (here 3 dollars) if what is meant by "lot traded", each transaction, as this charge can be considered as an administrative and processing fee which is not linked to the amount itself (i.e. it is not a rate). But if they fix a given rate, like 3 dollars for each thousand dollars, then that is pure Ribaa, hence forbidden.
Allaah knows best.