Some of you will doubt when it comes to trading forex. “Is forex trading halal? What is the real law?” is the most frequently asked question in the minds of traders.
Before going deeper into the law of forex trading according to Islam. We should know in advance what is meant by forex trading.
Forex trading is an investment that can provide fantastic returns. Forex trading or in other terms foreign exchange is a type of investment related to exchange rates or international currency prices (foreign exchange).
The method of forex trading itself is done by buying currency when its value is low. Then, resell the currency when the money value is high.
The purpose of forex trading is to get profit/profit by transacting certain currency pairs as chosen. This profit is called a capital gain.
The general definition of capital gain is the difference obtained from the selling price minus the buying price.
For anyone from one of the parties who assumes that forex trading is illegal, including gambling, usury, and so on, it is advisable to seek information first.
Islamic law on forex trading
In the Islamic view, forex trading is considered halal because the product being traded has a clear form and value, namely foreign currency.
Forex trading is not a game that relies on luck like gambling. Because there are several things that can be denied regarding this view.
In the process, forex trading involves selling (sell) and buying (buy) activities carried out by traders. So, there is no such thing as betting/gambling in the forex transaction process.
Trading Forex with usury is also clearly different. Pure forex trading is a buying and selling transaction because forex trades currencies, not lending money expecting more returns.
MUI’s view of forex trading
In Indonesia, forex trading is regulated in law and conforms to the fatwa of the Indonesian Ulema Council (MUI), precisely in the Fatwa of the National Syari’ah Council Number 28/DSN-MUI/III/2002 concerning the sale and purchase of currency or so-called with Al-Sharf.
The MUI stipulates that foreign exchange (forex) transactions are permitted because the origin of the income is very clear.
The huge amounts of money that traders earn are not the result of bets on an international scale, but are regulated globally.
There are several types of transactions in forex trading that you need to know before discussing forex trading laws according to the MUI fatwa.
The following are the types of forex trading transactions:
1. Spot
transactions Spot transactions are transactions of buying and selling foreign exchange (forex) for delivery at that time (over the counter) or its completion within two days at the latest.
2.Forward Transactions
Forward Transactions are foreign exchange buying and selling transactions whose value is determined at the present time and is applied for a future period of between 2 x 24 hours up to one year.
3. Swap
transactions Swap transactions are contracts to buy or sell foreign currency at spot prices combined with purchases between sales of foreign currencies that are the same as forward prices.
The law is unlawful because it contains an element of masir (speculation).
4. Option
Transaction Option Transaction is a contract to obtain the right to buy or the right to sell which does not have to be done for a number of units of foreign exchange at a certain price and period or end date. The law is unlawful because it contains an element of masir (speculation).
MUI allows trading of the SPOT type, in which SPOT purchases and sales of financial instruments, commodities and other assets are made with cash and direct payments.
Forex that is prohibited according to Islamic law is SWAP, FORWARD, AND OPTION Transactions.
These transactions are prohibited for the reason that in SWAP transactions there are contracts of sale and purchase of foreign exchange at spot prices combined with purchases between selling the same foreign currency and forward prices.
In FORWARD transactions there are buying and selling foreign exchange transactions which are set at the present time and enforced at a future date.
Whereas OPTION transactions are due to contracts to obtain buying rights and selling rights that do not have to be made over a number of units of foreign exchange at a certain price and time period or end date.
Conclusion
After reading the discussion above, of course you can conclude how forex trading is legal according to Islamic law and the MUI fatwa. Is forex halal or haram?
The law of forex trading is lawful, but for online forex trading, the law is detailed:
- Halal, if the purchase price is the same as when the transaction was received by the seller (broker).
- Forex trading is declared unlawful if the price does not match when the buyer decides to make a transaction when the transaction is received by the seller (broker)