Short answer
Exchanging currencies is permitted on the spot, hand to hand (International Islamic Fiqh Academy, resolutions 63 and 102; AAOIFI, standard 1). Forex on online platforms almost always rests on leveraged CFDs with deferred delivery: it is excluded, even with a swap-free “Islamic” account.
What the institutions say
Official positions, with their reference. The badge sums up the institution’s position, not an opinion of Assabile.
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International Islamic Fiqh Academy Organisation of Islamic Cooperation, JeddahUnder conditions
Exchanging currencies is permitted on the spot, hand to hand; forward sales of currencies and binding promises of exchange are prohibited, as are contracts without delivery.
Resolutions 63 (1/7), 1992, and 102 (5/11), Manama, 1998
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AAOIFI Accounting and Auditing Organization for Islamic Financial Institutions, BahrainUnder conditions
Currency exchange must be settled immediately, physically or through an entry that stands in for it; interest-bearing margin, swaps and forward contracts are excluded.
Shariah standard 1 (trading in currencies)
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Diyanet Presidency of Religious Affairs, Türkiye (High Council of Religious Affairs)Under conditions
Gold, silver and currencies are exchanged on the spot; selling them on credit, even with no surcharge, becomes interest.
Fatwa on selling gold and currencies on credit (15/09/2020)
Positions are reported as they stand; other scholars may hold other views. Method and disclaimers
Depending on your country
- Türkiye
- Banks’ forward currency transactions (vadeli döviz) were examined by Diyanet’s High Council at a meeting devoted to participation banks; spot exchange remains the rule.
- Gulf states
- Some brokers offer “swap-free” accounts; the leverage and CFDs they use remain problematic.
Spot exchange
Currencies follow the rules of gold and silver: when exchanged for one another, they must be exchanged hand to hand (Muslim 1587, 1584). The International Islamic Fiqh Academy confirmed this for banknotes (resolution 21 (9/3)) and prohibited forward sales of currencies and binding promises of exchange (resolution 102 (5/11), 1998). An immediate transfer or account entry counts as taking possession (resolution 53 (4/6) on taking possession).
What the platforms offer
Most “forex” offers for individuals are CFDs: you never receive any currency, you collect or pay an exchange-rate difference, with leverage that amounts to a loan from the broker. On top of this come overnight financing swaps, which are interest. This is excluded by the Academy (resolution 63) and by AAOIFI.
“Islamic” accounts
They remove the swaps, often replacing them with fees. The leverage, the lack of delivery and the deferral of settlement remain: removing the swaps is not enough to make the transaction compliant.
What remains possible
Changing money to travel or pay, on the spot; holding currencies in a multi-currency account without interest; investing in compliant assets denominated in another currency.
The hadiths
Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, like for like, equal for equal, hand to hand. If these classes differ, sell as you wish if it is hand to hand
"Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, like for like, equal for equal, hand to hand. If these classes differ, sell as you wish if it is hand to hand."
الذَّهَبُ بِالذَّهَبِ وَالْفِضَّةُ بِالْفِضَّةِ وَالْبُرُّ بِالْبُرِّ وَالشَّعِيرُ بِالشَّعِيرِ وَالتَّمْرُ بِالتَّمْرِ وَالْمِلْحُ بِالْمِلْحِ مِثْلاً بِمِثْلٍ سَوَاءً بِسَوَاءٍ يَدًا بِيَدٍ فَإِذَا اخْتَلَفَتْ هَذِهِ…
Do not sell gold for gold except like for like, and do not sell less amount for greater amount or vice versa. And do not sell silver for silver except like for like, and do not sell less amount for greater amount or vice versa. And do not sell gold or silver that is not present at the moment of exchange for gold or silver that is present
Abu Sa‘īd al-Khudri (may Allah be pleased with him) reported that the Prophet (may Allah's peace and blessings be upon him) said: "Do not sell gold for gold except like for like, and do not sell less amount for greater amount or vice versa. Do not sell silver for silver except like for like, and do…
لاَ تَبِيعُوا الذَّهَبَ بِالذَّهَبِ إِلاَّ مِثْلاً بِمِثْلٍ وَلاَ تُشِفُّوا بَعْضَهَا عَلَى بَعْضٍ وَلاَ تَبِيعُوا الْوَرِقَ بِالْوَرِقِ إِلاَّ مِثْلاً بِمِثْلٍ وَلاَ تُشِفُّوا بَعْضَهَا عَلَى بَعْضٍ وَلاَ تَبِيعُوا…
Frequently asked questions
Is forex without leverage permitted?
If it is a genuine purchase of currency, delivered immediately to your account, yes. If it is a CFD without leverage, the lack of delivery is still a problem.