What Are the Conditions of Currency Exchange?
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What Are the Conditions of Currency Exchange?



Reply Date

Oct 01, 2018


As-salaam `alaykum! When changing international currency (Euro) to Algerian dinar, for example, does one has to follow the local bank rate or is it possible to use the parallel market one? How much is the amount of nissab in Germany? Baraka Allah Fikum!




Wa`alykum as-salaamu wa rahmatullahi wa barakaatuh.

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

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.

In this fatwa:

There are two conditions for currency exchange:

1- If you change large units for small units of the same currency, the total amount must be the same.

2- The exchange must be on the spot.

In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

In currency exchange two conditions are necessary:

1- If you change large units for small units of the same currency (e.g., 100 dollar bills for one dollar bill) the total amount must be the same; and,

2-The exchange must be on the spot, i.e., delivery of the two currencies must be made at the time of the contract.

This means:

a) Exchange of Euro for Dinar can be done at any price agreeable to the two parties as long as there is no cheating or big deviation from the price that prevails in the market.

When governments set prices for transactions that run through central banks, you have to abide by that price only when you have to go through the central bank. Does it mean other prices, such as parallel market price or a black market price, are permissible if you can avoid the central bank? Yes, they are permissible.

b) Delivery must be at the time of the contract, you cannot delay any part of the payment of either currency for any time, even a few hours.

But when such an exchange is done between countries and if the procedures of the transfers take some time (e.g., a few days), the transaction is still considered as happening on the spot, provided that you do not incorporate any intended delay in the procedure.

Hence, you ask for an immediate transfer and immediate charge to your account or you pay cash and any procedural time consumed until the other party receives the other currency in the other country does not violate the principle of immediate delivery.

Allah Almighty knows best.

Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.

About Prof. Dr. Monzer Kahf

Dr. Monzer Kahf is a professor and consultant/trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic economics, finance, Islamic transactions (Mu'amalat). Dr. Monzer Kahf is currently Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey

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