Islamic Forex Account Fitwa

Islamic Forex Account

Answered By: Mufti Ikram ul Haq - Fatwa Center of America

Question:

Assalam-o-Alaikum I am familiar that opening an online forex account (Standard, Micro, Mini) is HARAM because it contain Riba, Interest. I read many fatwa's on this issue and I am satisfied with them. But I have not been able to get an answer for what I was looking for. Your reply to my question will help every Muslim investor. Nowadays, some brokers are providing Islamic Forex account for Muslim investors which they claim that these accounts comply with Shariah laws and do not accumulate interest or swap fees. Some common Islamic forex trading account conditions include: Swap Free Forex Account: In Forex trading, when traders leave positions open overnight, it is referred to as a rollover. This usually entails rollover fees, but when trading with a Forex Islamic account, these fees are waved. No Riba Policy: According to Islamic law, giving or taking interest on transactions is strictly forbidden. This of course presents a problem when dealing with banks or other financial institutions. With Forex Islamic accounts, all "Riba" charges are canceled. Musharaka or commonly called joint venture: This refers to a partnership or joint venture for a specific business with a profit motive, whereby the distribution of profits will be apportioned according to an agreed ratio. In the event of losses, both parties will share the losses on the basis of the agreed ratio also known for Islamic MT4 trading platform. Now my question is that: - Q: Can we trade in Islamic Forex Account as it contains no interest fee on them? Q: Can I do Istekhara for this to get a consent from Allah SubhanaoTallah?

Answer:

بسم الله الرحمن الرحيم 

In the Name of Allah, Most Gracious, 


Most Merciful. 

الجواب حامداومصليا

In light of the information available on Tadawul Islamic Forex Accounts or TDFX, I have learned that this particular form of forex trade is free of Riba and any swap or roll over fees. The Fuqaha have considered forex trade to be part of Bai-ussarf which has some strick condition to be fulfilled unlike ordinary forms of trading.
Among the conditions of Islamic Forex Trading Account, there is one condition known by the name of "Hibah (Gift or Donation). According to the condition, "The Hibah refers to gifts awarded voluntarily in return for a loan given. Now this Hibah or gift giving if it is done solely voluntarily then it will be permissible but if there is kind of pressure placed on the donors to give the gift then it would not be permissible. Therefore, if the investors are not willing to give the gift, it would not permissible to force them to give or to pressure them into giving in anyway. Such gift that is given under pressure or force is not acceptable.
In my opinion if the Islamic forex account strictly follows the guidelines mentioned in the description which include no interest accumulation and no swap or roll over fees then it would be permissible for a Muslim to engage in this particular form of trading.
In my opinion, it is important to have this Islamic forex trading officially recognized by a body of Muslim scholars who known for their expertise in Islamic finance and there should be an active board of Shariah advisors to oversee the transaction of this company that offers these Shariah compliant services to its clients because without the proper oversight it is very easy to stray from the principals and guidelines of Islamic Shairah.
Therefore, I conclude that in light of the information available about the Islamic Forex Account, it is permissible to invest and trade in Islamic forex trading.
And Allah knows best.

Mufti Ikram ul Haq
Fatwa Center of America
9 Safar 1433/ January 3 2012
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