Forex is known as foreign exchange or the
market currency. To be more understanding, forex is like any form of the
speculation which means we buy a currency at a lower price and sell the
currency at a higher price. However, according to National Fatwa Council the
practice of forex is haram. This is because a study by the committee found that
the forex trading involves currency speculation which is against the Islamic
law. Bank Negara Malaysia (BNM) also saying that the selling and buying of
foreign currency in Malaysia are only allowed with the licensed of any banks. How
about the forex trading based on the leverage practice in online forex trading?

            According
to the head of research affair at the International Shariah Research Academy, Dr
Asyraf Wajdi Dusuki, he says that the practice including leverage where an individual
trading forex based on online are allowed in order to provide only part of the
amount invested with the balance provided by the forex broker. The result in a combination
of the two contract which are sale and purchase of the currency and the credit’s
provision, which is prohibited by Islamic law. He also added that online forex
trading have not been licensed by BNM, which making them illegal and contradict
with Shariah.

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            In
the other hand, online forex trading are not permissible since the exchange are
not hand to hand. What is hand to hand mean? It means that any exchange of the commodities
should have the akad which means I’m buying or I’m selling. However, this
question are not a deal since the olden day there were no computers or
telephone. In fact, one can conclude that it is natural and accepted for an
agreement to be made between two different parties. In modern times, it is
arguable that in terms of the trading, agreements are made between forex
brokers and traders, so this will qualify under the definition of two different
parties, which will be allowed under Islamic law.

            In
addition, in order to know whether the doing forex online is permissible or
not, let see these conditions which according to Shariah. First, the currencies
must be paid in full and second both payment must be at the time of the
contract. From these conditions, we can know that futures and margin
transactions are not permissible. This is because, nowadays almost all the
transactions on the internet are futures. According to Prof. Dr. Monzer Kahf,
he does not recommend the forex trading unless we need a foreign currency to
use for import and export. He added that the profit from forex is a bad thing
in any way.

            In
conclusion, online forex trading are not permissible in Islam because the forex
trading do not fulfill the conditions under Shariah law. Another reason why he
trading in online currencies with exchange platform are not allowed because it
is dangerous to macros and no actual delivery has ever been done even though
they make fake credits and debits.