Ruling On Online Forex Trading

RULING ON ONLINE FOREX TRADING

The original ruling on the exchange of currency with another currency (al-ṣarf) is permissible on the condition that the exchange or transaction is conducted with transfer of ownership by both parties in cash and immediately (al-taqābuḍ).

As for currency trading online through platforms, whether local or foreign, it is prohibited whether conducted by individuals or institutions for the following reasons:

1. The absence of transfer of ownership by both parties in cash and immediately (al-taqābuḍ), whether actual or constructive (ḥukmī).

2. The existence of the element of ribā (usury), namely in the leverage facility (cash loan) by the platform that stipulates currency trading be conducted with paid charges only with the same platform. Ribā also occurs in the overnight charge on loans not settled on the same day

3. The presence of gharar (uncertainty), arising from the unclear identity of the platform provider, the legal framework governing the trading, and the validity of the transactions carried out.

4. The presence of maisir (gambling), which exposes traders to the chance of profit or risk of loss based on speculation (forecasting) of currency movements that are beyond their control, effort, or influence. This is akin to placing money as a stake, where one party gains at the expense of the other, and profit or loss depends on chance.

Hereby, in order to restore the stability of a given currency’s value, currency trading for the purpose of speculative profit must be stopped, so that currency is not treated as a mere commodity. Such practice would further weaken an already fragile fiat‑money system and increase inflation.