Is Forex Trading Permissible?

Answered by Shaykh Faraz A. Khan

Question

I want to know about forex trading is it permissible in Islam?

Nowadays, many houses offer interest-free accounts, so is it permissible to trade in currency pairs like we buy euros for dollars and later on sell them and make a profit?

Answer

I pray this finds you in the best of health and states.

In and of itself, currency exchange (sarf) is permissible as long as certain conditions are met, such as the transaction be done hand-to-hand without delay. [Mawsili, Ikhtiyar]

However, with respect to forex trading, in particular, Mufti Taqi Usmani — leading contemporary Hanafi scholar and Islamic finance expert — believes it to be impermissible due to various problematic elements associated with this form of trading.

Please see:

Forex Currency Trading

And Allah knows best.
wassalam,

[Shaykh] Faraz Khan
Checked and Approved by Shaykh Faraz Rabbani

Shaykh Faraz A. Khan has lived in Amman, Jordan, for several years studying and teaching traditional Islamic sciences, with a focus on Hanafi jurisprudence, hadith studies, theology, logic, and Arabic grammar. He translated and annotated the classical Hanafi primer “Ascent to Felicity” (Maraqi ‘l-Sa`adat) by Imam Shurunbulali, recently published by White Thread Press.