Since receiving as well as paying of interest is Haram in Islam, Muslims therefore require a special kind of forex trading account. Conventional forex accounts charge (or pay) interest to the account holder, determined by rollover positions held over the weekend – on a currency pair that has a positive/negative interest rate differential between the currencies. Islamic Forex Accounts negates the interest costs receivable (or payable), and in fact can still function as effectively as any other conventional forex accounts. It is important for a Muslim trader to partner with the right broker in order to make your investments as shari’ah compliant as possible. Below, we discuss some of the issues surrounding forex trading within the Islamic Finance domain:

The Trading of Currency with Currency

Fursa FX recognizes that only “spot forex trading” is considered halal as the transaction is done on a spot basis, meaning both price and delivery of the asset are settled at the same moment in time. Currently, we refrain from trading in currency options, swaps, futures, forwards and other derivative contracts as the conditions for which trading of these instruments are permissible depends on a case to case basis (for example, Islamic Scholars and Experts have claimed that swaps are not allowed in the manner they are practiced in the commodity exchange, defined under the AAOIFI Syariah Standard, hlm 358). However, buying and selling of currencies is permissible and is termed Bai Sarf in Islamic banking, and Muslims are allowed to exchange Silver with Gold, buy Gold with US dollars and buy US dollars by selling Euro. The mechanics of Bai Sarf is halal but it has to be done on the spot. We do our best to ensure that all the transactions that we provide or conduct are according to the principles of Halal, or Islamic permissibility.



By:

About the Author:

forex trading guide