Forex (currency) Markets — investing in currency — working in banks



1) Is investing in the Forex (currency) Markets haram? 2) Forex Markets is a currency market, but the investment is high at risk, is it still considered haram?

3) I heard investing in currency, or even simply working for a bank is not good. Can you explain, please.


(name withheld by our site)

Time: Saturday February 27, 2010 at 1:13 pm

Answers: وعليكم السلام ورحمة الله وبركاته

We thank you for your questions. It is a valued question and we hope you can benefit from our response, inshaAllah, Ameen.

Based on our knowledge of Forex Markets and how they function, the following pointers are to be shared. Our response is not linear. It requires thorough understanding of this economic process.  Kindly bear with us as we share a simplified response.

Answer 1)

Key points that make such a transaction non-sharia complaint:

  • If one cannot take possession of a product (in this case, the currency) at the time of purchase, then such a transaction would not be sharia compliant.
  • Possession can be physical or via a deposit slip or some genuine proof of its attainment. (For example: I must be able to do as i please with the good (currency) at the given point it was purchased by me. Such is generally not the case in Forex matters.)
  • The conventional aspect of forward exchange sales and contracts, shorts sales, etc. as well as selling of currencies as done for business purposes is against the grain of the Islamic precept of economic practices.
  • Under ideal conditions: currency trading should be done for personal purposes.
  • Business transactions should not have in it the primary intent to make profit coupled with the notion to exploit a negative economic situation or add to the misery of another and encompass this ‘negativity’ of others towards one’s personal advantage. This is against the Islamic concept of healthy business relations
  • Usual delay for a transaction would be viewed as sharia compliant; however, a currency cannot be traded until entire transfer and transaction has transpired between parties. A person cannot sell that which they do not fully own to a third party as can be the case in Forex matters.

*If aspects of the above cannot be adhered to, then such a transaction would be deemed an non-sharia compliant. It would be best to refrain from such a transaction. The above if just a mild response of what makes makes such a transaction non-sharia compliant.)

Answer 2)

  • Level of risk does not necessarily make a transaction haram. If the Islamic criteria is met, it would remain religiously compliant.
  • To intentionally place oneself in harms way would be against Islamic economic values.

Answer 3)

  • Voluntarily working in a bank whilst having the ability to work elsewhere coupled with the fact that the  primary income of the financial institution is from haram avenues (i.e. interest) remains forbidden.
  • Working in a bank whose primary income is from fees or other halal investments which consumers voluntarily pay into and support the institution would be permissible. However, if there is commingling of halal and haram and the halal remains greater, it would be better to not work for such an institution if other employment choices do exist.
  • Should there be religious violations in the bank you work in, then under such conditions it would be best for you to seek employment in an area that upholds your religious ethics of seeking halal income. Until that point, your employment should be retained. Termination of your employment should not be abrupt. Termination should only take place once a new occupation is attained. Until that point, ask Allah (SWT) for forgiveness and actively seek what is best for your Imaan.

Allah Certainly Knows Best.


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