This essay will cover the fundamental tenets of Islamic Forex trading and some essential factors that Muslims should consider. We will answer, “Is Forex Trading Halal or Haram in Islam?.”

Forex Trading Halal or Haram

Many Muslims are curious whether Forex trading is legal according to Islamic law. The sort of Forex trading done and each trader’s unique circumstances are two critical determinants of the answer to this issue.

Islamic scholars’ perspectives on forex trading

The opinions of academics on forex trading vary. We’ll talk about the various perspectives of several well-known Islamic thinkers below.

Muhammad Ali Mirza, an engineer

The statement “Forex Trading is an (over the counter) OTC company” is made by engineer Muhammad Ali Mirza. The ups and downs in the value of various currencies throughout the globe allow you to make money. Since you are trading money for money, it is entirely halal. In forex trading, you swap currencies. Therefore there is no problem with that. If you had been exchanging money, there would have been a problem.

For instance, you will earn if you purchase gold, increasing its market value. It won’t be Haram, then. Similarly, you make money if you buy a currency, and its value increases. Nothing is wrong with it.

Tariq Masood, a mufti – Hanafi

When questioned about his opinions on whether forex trading is permissible, Mufti Tariq Masood said, “It’s vital for you to have it in your actual possession to purchase or sell anything (For instance, gold, silver, currencies) except for anything that cannot be moved from one location to another, such as land and home. You cannot sell anything until you have it in your hands. You don’t own the currency when you buy or sell it online; instead, you merely purchase it and act as if you do. Forex trading is entirely forbidden, and Haram.

Zakir Naik, M.D. – Ahl – E – Hadith

An Islamic scholar with international renown is Dr. Zakir Naik. His opinions on forex trading are as follows: “As far as forex trading is concerned, as long as you adhere to Sharia law, it is entirely allowed. For instance, if someone goes out and purchases foreign money, for example, if they convert their dollars for sterling pounds, as the value of the sterling pounds rises, they sell the sterling pounds and make a profit. It is OK if it is carried out immediately and with your money.

But numerous haram aspects are involved in forex trading when done on a bigger scale and with more variables. For instance, it is forbidden to make a purchase reservation and then postpone the transaction.

Forex trading has several ramifications, mainly when done on a big scale. Sutures might be present; this is prohibited in Islam. Because loans, options, and futures have haram components, the whole transaction is Haram.

Taqi Usmani Mufti – Hanafi

Currency exchange (sarf) is legal in and of itself, provided specific requirements are followed, such as the transaction being carried out immediately and hand to hand. [Ikhtiyar, Mawsili]

But concerning currency trading in particular, Mufti Taqi Usmani, a prominent modern Hanafi scholar and specialist in Islamic finance, thinks it is forbidden owing to several problematic aspects of this kind of trading.

Forex trading: Halal or Haram?

Continue reading Is Forex Trading Halal or Haram in Islam Hanafi & Ahl E Hadith.

Two Primary Forex Trading Styles

Trading in foreign exchange and Spot forex futures are the two primary categories of forex trading. Currency futures contracts are deals to purchase or sell a specific currency at a future date instead of spot Forex trading, which includes the actual exchange of assets. Islamic law generally permits spot Forex trading but forbids currency futures contracts.

This ban is because spot Forex deals are regarded as spot contracts, described as agreements to immediately buy or sell a currency, commodity, or other assets.

Currency futures contracts are regarded as forward contracts, which are deals to purchase or sell an asset at a later time. Forward contracts are forbidden in Islam because they entail guesswork and ambiguity.

Is Forex Trading Halal or Haram?
Is Forex Trading Halal or Haram?

Disagreement among Islamic scholars

On the other hand, there is considerable disagreement among Islamic scholars over the legitimacy of spot forex trading. Because spot Forex trading is a kind of deal, some academics contend it is legal. Others claim that since it entails guesswork and ambiguity, it is unacceptable.

Based on their interpretation of Islamic law, each Muslim must ultimately decide whether or not to participate in spot Forex trading.

In terms of currency futures contracts, Islamic scholars agree. Islamic law prohibits currency futures contracts because they entail speculation and unpredictability.

Important Note

Muslims should always seek the advice of a certified Islamic scholar before determining whether or not to participate in Forex trading. The only way to guarantee that they choose to conform to Islamic law is to do this.

Continue reading Is Forex Trading Halal or Haram in Islam Hanafi & Ahl E Hadith.

Answer to the First Question

Let’s attempt to answer the first question, Is an Islamic Forex account halal?

You may earn by exchanging several currencies at various times throughout a Forex transaction. While this act is halal, several requirements must be met:

The Forex contract requires that you create and exchange in one sitting; there can be no delay between signing the contract and carrying it out.

The currency cannot be cut for a Forex deal to be legal. Islamic law prohibits selling and borrowing an asset you do not own when you engage in short selling.

The transaction cannot be carried out using borrowed funds or interest since doing so is frowned upon in Islam.

Answer to the Second Question

Let’s now attempt to determine if forex trading is considered to be Haram:

Contrary to popular belief, the Islamic view on whether dealing in foreign currency is prohibited is more nuanced and complex. According to Islamic law, all economic relationships must be fair and not have the potential to harm either side.

We have already shown that it is legal to profit from currency exchange, but Forex involves much more than that.

Companies that deal in Forex don’t merely focus on investment. Additionally, they serve as a liaison between prospective investors and the institutions they borrow money from to make investments. Additionally, some forex firms use forward and future transactions, often forbidden by Islamic law.

The legality of speculating on a currency’s value without owning or selling it is a common concern among Forex traders. This speculation is considered gambling, making the business unlawful (not allowed).

Continue reading Is Forex Trading Halal or Haram in Islam Hanafi & Ahl E Hadith.

What is halal?

The common terminology used in the Quran to denote the categories of permissible or legal and prohibited or illegal is halal and Haram. The Quran uses the root halal to represent lawfulness and may also mean to leave the pilgrimage state and enter a profane condition. Each of these interpretations conveys a different meaning than the root haram. The root haram may mean either disintegration (such as violating an oath) or alighting (such as of God’s wrath). The Quran often uses the word ahalla (to make lawful) to denote legality, with God as the express or implicit subject.

What is halal business?

According to the Dubai Chamber of Industry and Commerce, halal food buying behaviors worldwide were predicted to be $1.1 trillion in 2013, or 16.6 percent of the world’s market for food and beverages, with an annual growth of 6.9%. Turkey ($100 million)  and Indonesia ($197 million in market price in 2012) are emerging economies. Halal food sales in the European Union got projected to be worth $30 billion, with France accounting for around $8 billion. This industry is said to expand by about 15% annually.

The halal food and beverage sector has significantly impacted supermarkets and other food-related businesses, including restaurants. In 2011, halal food sales in French supermarkets reached $210 million, an increase of 10.5% from five years earlier. Even more than the market for other typical food kinds, halal goods have a sizable following in France. For instance, the demand for halal food and drink in France in 2010 was over twice that of organic food.

In addition to 40 frozen halal items and 30 pre-cooked halal meals, Auchan, a prominent French grocery chain, now carries 80 certified halal meat products. Halal dishes are now available on the menus of upscale eateries and catering companies. Additionally, many beverage firms, like Evian, have tried affixing a halal stamp to their goods to demonstrate that the water and other drinks they sell are clean and do not violate Islamic law’s Haram or banned categories.

What is Haram?

The Arabic word “Haram” means “Forbidden.” This phrase may allude to a holy object to which initiated into the sacred knowledge or those who are not pure are not permitted access. Or, in contrast, to an evil deed and, therefore, a “sinful action that got prohibited from being done.” The word also means “put apart,” making it the Arabic counterpart of the Hebrew concepts of “saucer” and “rem,” as well as the notion of “sacred” in Roman religion and law. One of the five Islamic laws that outline the morality of human conduct, Haram is a term used in Islamic law to denote any behavior that God forbids.

The sunnah component of Haram is the greatest rank of prohibition, and acts classified as Haram got forbidden in the Quran’s holy writings. No matter how noble or well-intentioned the goal, if anything got declared Haram, it remains illegal. On the Day of Judgment, sins, good deeds, and meritorious deeds are put on the Mizan (Qayamah weighing scales) and measured according to the sincerity of the performer. Based on the literary interpretation of the critical religious scriptures, views of various legal schools of thought or madhhabs might range significantly over what is not or is Haram (Quran and hadith).

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What is haram business?

Business ethics in Islam.

Islam forbids riba or any excessive increase over and above the principle, including usury and interest. The Islamic doctrine of zakat, which permits money to pass from the wealthy to the needy, is violated by interest. Riba is forbidden because it keeps money out of the hands of people with low incomes and in the hands of the rich. Riba is also said to create egotism and avarice in people.

Bribery, theft, and gambling are examples of business and trade activities seen as Haram because they do not lead to a free and equitable exchange of services and goods. As a result, Islam forbids engaging in any fraud or dishonesty in business.

Many Islamic religious religious and jurist organizations have deemed MLM trade Haram, such as the Permanent Committee for Scholarly Ifta and Research of Saudi Arabia. In this process, the following are related:

  1. Labor without exchange
  2. Exchange without laborer
  3. Condition on another condition
  4. Contract on another contract
  5. Widespread uncertainty of losses and profits
  6. Similarity to gambling
  7. Similarity to riba (interest)
  8. Lying and exaggeration
  9. Not everyone benefits equally
  10. Financial fraud and torture

Continue reading Is Forex Trading Halal or Haram in Islam Hanafi & Ahl E Hadith.

Conclusion

Is Forex Trading, or Is Forex Trading Halal? It depends on the kind of deal you are making in the response. The deal is halal if you are only exchanging dollars. The exchange is not permitted by Islamic law; nevertheless, if you are speculating or gambling. Before making any choices about Forex trading, always seek the advice of an experienced Islamic scholar. A business that is based on virtual transactions is not halal in Islam.

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J. Shaw

Joseph Shaw is a renowned expert with two decades of experience in health and fitness, food, technology, travel, and tourism in the UK. His multifaceted expertise and commitment to excellence have made him a highly respected professional in each field.

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