Category: Business Matters
Fatwa#: 37098
Asked Country: Malawi

Answered Date: Oct 29,2016

Title: Online forex?

Question

Salaamz brothers

I want to know of online forex.

To give u a basic understanding of what it's about. Here's a basic transaction.

Every transaction is conducted online at which point we purchase a particular currency.

Once we are confident regarding our analysis and interpretation of the market. At this point we own a particular amount of foreign currency with a view of appreciation of that currency in relation to another. Once we are satisfied with our trade or if target is reached we will sell the currency we now hold for a higher price/profit.

All transactions are concluded online with a software system which allows for instantaneous transfer of profit/losses.

With such software we are immediately owners of the currency pair we wish to acquire the moment we purchase it.

 

Clarification on online forex 

Basically our business model revolves around the currency market. Every currency has a value when measured against a fellow currency. For example, Rand/dollar.

What we as a company do is a lot of research and technical analysis of these currencies and look for strength or weakness in any particular currency. Once we have found this we look for another currency which is showing us the opposite. For example, we would look at the US dollar, if it showing strength this week, and the Rand is not them we know we will sell our rands and purchase dollars.

At this point all we are doing is selling one currency in exchange for another. We will then hold on to the dollars until such time as it appreciates in value against the Rand. Once it appreciates we will then sell our dollars and buy back our rands of which we will now receive more.

That is the basics of the transactions which we conclude.

Yes, it is cash. The moment we buy a currency we are buying it cash. There are no conditions with regards to purchase except that you must have enough money to purchase the amount you want.... All of this takes place on a trading platform and it is electronically down on the spot

Please let me know if there is any questions regarding the process as I will be happy to answer

 

Further clarity on online forex

It works like a prepaid account... you fund money in and only then can you make trades. The platform where the trades occur is electronic. The reason I say it is cash is because the moment we buy or sell a currency our cash initially deposited will change. no physical possession of the currency takes place But Yes it comes straight into our trading account the moment we make a  trade. So that's what I mean by cash. That we trade on by getting possession of it in our accounts 

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

According to our understanding of the forex online business as explained by you,

  • You purchase a particular currency online
  • The currency is in your possession
  • You conduct a research on the value of currencies and when you feel the sale of the actual currency is profitable, you sell it
  • The payment to you is on spot
  • You have full control over the currency once it is transferred into your account.

If our understanding is correct, then the forex dealing as explained by you is permissible. Bear in mind, if the payment is deferred then the currency can be sold only at market value.1

And Allah Ta’āla Knows Best

Huzaifah Deedat

Student Darul Iftaa
Lusaka, Zambia 

Checked and Approved by,
Mufti Ebrahim Desai.

__________________

  1. Contemporary Fatawa, Mufti Taqi Uthmani, Page141- Idarah Islaamiyaat 

پہلی صورت میں چونکہ ڈالر و غیرہ کے عوض روپے ملتے ہیں اور دو ملکوں کی کرنسی مختلف جنس کے حکم میں ہے اس لیے کمی بیشی کے ساتہ بیع کرنا جائز ہے نیز چونکہ یہ ثمن عرفی ہے ثمن حقیقی نہیں اس لیے  اس مجلس میں تقابض بہی ضروری نہیں، ہاں ایک جانب سے قبضہ ضروری ہے تاکہ بیع الکالی بالکالی سے بچ جاۓ

 فتاوی دار العلوم زکریا -جلد 5-ص333 زم زم  

 

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