Majlis Fatwa Kebangsaan: Hukum Pelaburan Forex

 

Jan 22, - Is Forex Real Or Scam I'm not in any way saying that all forex software is a scam, just that it ustaz zaharuddin Hukum Forex Dalam Islam .

The rupee-dollar exchange rate agreed upon is 1: Kalaupun dalam pelaksanaannya masih ada pihak-pihak yang merasa dirugikan dengan peraturan perundang-undangan yang ada, maka dapatlah digunakan kaidah hukum atau legal maxim yang berbunyi: Perniagaan forex halal atau haram menurut ustaz ahmad. Another point that merits serious consideration is the possibility that certain currencies may possess thamaniyya, that is, used as a medium of exchange, unit of account, or store of value globally, within the domestic as well as foreign countries.

Tuan Tanah

Oct 31,  · Video Terbaru Soal Bagaimana Hukum Forex Dalam Islam.

Bila bercakap mengenai forex di Malaysia ni, seakan akan kita menjadi takut seolah olah forex itu salah satu jenayah berat! Ya, mungkin forex itu tidak 'regulated' di Malaysia dan kalau dari Syariahnya seperti yang difatwakan oleh MFK, forex itu diharamkan. Leverage adalah dalam bahasa senangnya penggandaan. Contohnya, dalam pelaburan jika anda ada modal sebanyak RM1, dengan pemberian leverage oleh pihak broker misalnya nisbah kepada dalam terma leverage disebut 1: Dan dalam forex, leverage banyak membantu pelabur namun dari segi Syariahnya, ia ada kena mengena dengan pemilikan yang tidak nyata dan melanggar hukum syarak.

Saya tidak mampu untuk ulas atau debat lanjut mengenai hukum ini, tapi apa yang nyata ini adalah satu satunya kalau boleh dikatakan sebagai rintangan dalam seorang trader Islam untuk melabur kat forex ni. Dari Syaraknya, interest adalah riba dan dengan ini forex yang membabitkan overnight dan swap interest adalah nyata hukumnya haram.

Namun, kebanyakan broker sekarang ada menawarkan Swap Free account kepada pelabur Islam mereka. Masalahnya disini, adakah mereka memikirkan tentang halal dan haram? Tidak dinafikan saya dipujuk oleh beberapa rakan saya dan juga kenalan keluarga saya untuk melibatkan diri dlm HYIP ni.

Mana hati tak tergoda apabila dapat membuat duit dengan sebegitu banyaknya tetapi alhamdulillah saya berasa ragu2 untuk melibatkan diri didalam skim2 pelaburan ini. Tambahan lagi, saya membuat research yang begitu banyak untuk mengetahui hukum hakam pelaburan di dalam Islam. Dan dengan akhir kata, begitulah saya menjumpai laman web saudara yang banyak memberi ilmu kepada saya dan juga kepada pembaca lain.

Akhir kata, keep up the good work! Salam iklhas, Syafrizal from SyafTheGeek. Kan ustaz dah kata nama riba tu riba annasiah Jangan ingat semua yang berkaitan dengan forex tu haram. Sebenarnya ustaz zaharuddin sendiri ada cakap Forex ni diumpamakan macam ayam Tetapi instrumen-instrumen yang diperkenalkan seperti "hedging" dan sebagainya yang membuatkan dia jadi HARAM..

Dia berbeza kalau kita menjadi forex trader dengan kita melaburkan duit dalam syarikat yang membuat perniagaan forex. Kalau kita menjadi forex trader,sebagai contoh,ada syarikat forex yang menawarkan kita akaun,lepas tu kita masukkan duit,dalam masa dua tiga hari,kita yakin nilai euro akan naik,jadi kita pun jual.. Contohnya program HYIP atau high yield investment program.. Itu memang confirm haram.. Kalau tak percaya tengok video ni. Forex Trading tu mmg haram la encik Forex Trader!

I am sure u have given good informtion here but the problem is I did not understand the language here: Is it possible for u to please translate this blog to english so that ppl from other countries can also benefit from the information here.

Thank u and Allah Hafiz. Assalamualaikum, saya teringin nak tahulah ustz Zaharuddin ni simpan wang di mana ye?? Masih bawah bantal lagi kut.. Awat tak cukup pakar syariah ke kat bank2 situ? Kesimpulannya bila ustaz tu sendiri yg terlibat dengan forex aktiviti tu terus halal.. Ustaz kan dah terang kan bab bank lakukan forex.. Kalau lah Islam boleh menguasai dunia ini, Insyaallah semua perniagaan akan halal, tapi tak tau bila akan berlaku.

Bolehkah dijadikan alasan maslahah umat Islam untuk mengatakan perniagaan forex halal?. Pening jugak nak membacanya pasal halal haram yang diterangkan. Tapi pastinya ustaz lebih memfokus kepada swiss chash yang popular tu. Berbalik kepada cerita halal haram forex nie. Saya ada terbaca tentang soal jawab hukum forex di surat khabar. Tak ingat le surat khabar mana. Tapi yang pastinya jawapan kepada persoalan tersebut membawa 2 jawapan.

Satu halal dan satu haram. Yang haram ialah yang mana pelabur itu melaburkan sejumlah duitnya, kemudian tunggu hujung bulan. Macam fix deposit le contohnya. Yang ini orang Malaysia kita memang suka.

Dilihat pagi dan petang membawa ke malam. Macam BSKL adaq saham syariah. Pelabur direct ke broker tanpa ada orang tengah. Tapi yang nie rasanye duit belaka. Kita sibuk melihat dan mengkaji pagi petang, dengar berita yang oleh membawa spekulasi matawang sesebuah negara. Tapi saya bukanlah ustaz yang boleh menyatakan hukumnya secara terangan. Ustaz punye blog nie mungkin boleh buat kupasan lebih lanjut kot. Baru nak belajor forex.

Mengapakah ramai masih lagi ragu2 tentang melaburkan wang mereka? Jika pelaburan yang dilakukan menerima keuntungan, kita boleh berzakat. Saya rasa sedih kerana kita harus menjadi 'pak turut' kepada ustaz2 yang tidak ada pengetahuan tentang bidang kewangan.

Benar hadith nabi tentang akhir zaman, manusia tidak peduli mana yg halal dan mana yg haram. Amat menyedihkn, kenapa tidak mementingkan akhirat Dr Zaharuddin tu pakar kewangan Islam. Blog anda sesuai dijadikan pembelajaran mengenai ekonomi Islam.

T memberkati dan membimbing kita semua di dalam mencari rezeki yang halal dan direhai olehnya kerana sesungguhnya tiap2 makanan dan minuman yang kita makan melalui hasil yang HARAM, maka nerakalah tempatnya..

Mengenai bab forex ini Dlm forex ini ada 3 benda yg kena ambil perhatian. Leverage tang sini sangkut Hukumnya menjadi harus jika kita menepati ketiga-tiga syarat dibawah 1. This comment has been removed by the author. Hukum Leverage Pandangan pertama: Ianya dianggap pinjaman jika pedagang menggunakanya.

Pinjaman ini tidak melibatkan faedah. Assalammualaikum, dimana saya boleh dapatkan institusi kewangan Islam y menguruskan forex ini? Saya baru sahaja dalam bidang forex ini. Kesimulannya forex ni boleh ke x boleh? Ada yang saya dapati mengatakan ianya harus Diharapkan banyak lagi artikel-artikel yang menyentuh soal ekonomi untuk mengeluarkan masyarakat Islam daripada was-was. Kedudukan nilai mata wang dalam pasaran pula adalah tidak tetap dan boleh berubah bila-bila masa sahaja.

Keadaan sebegini boleh dikategorikan sebagai satu penipuan kepada pihak yang menyertainya. Perniagaan dalam pasaran mata wang seumpama ini berlaku tidak dalam satu majlis tetapi jika sebaliknya adalah harus seumpama money changer kerana telah ditetapkan harganya. Oleh itu, penyertaan pelaburan dalam pasaran mata wang forex trading hukumnya tidak halal kerana mengandungi unsur riba.. Ini adalah hasil carian yang saya dapat melalui laman web ; islamgrid. Pertukaran wang dengan wang seperti yang terdapat pada urusniaga dalam perniagaan pasaran mata wang forex trading adalah mengandungi unsur riba.

Pelaburan forex ni ade yg haram dan ade yg harus Kepada anonymous, sebenarnya ada banyak lagi alternatif lain kepada pelaburan dan cara2 buat duit yang halal.. Nak atau tak je.. Antara alternatif lain buat duit cepat dan halal ialah, 1. Main saham yang patuh syariah 3. So ilmu yang ada tu mmg boleh pakai dan yang pasti halal. Bisnes Yang penting kena ada usaha dan rajin untuk tambah ilmu.. Ada sebab-sebabnya ia diharuskan.

Boleh rujuk website Bursa Malaysia. Apabila mata hati digelapkan dengan wang,agama dan ilmuwan dipersalahkan. Ustaz itu pakar kewangan syariah,ilmu beliau jauh lagi banyak dari kita, tapi mereka sewenang wenangnya menolak dan melakukan tafsiran sendiri. Semoga kita sentiasa dikurniakan rahmat dan petunjuk dari Allah. Ingatlah,kita mahu yang berkat walaupun sedikit,jauhi shubhah.

Adakah dalam semua perkara orang bijak agama ini betul sehingga pendapat mereka menjadi fatwa yang tak boleh tidak mesti diikuti sedangkan kalau kita lihat di malaysia hukum pelaburan ASN dan ASB pun berbeza diantara pendapat majlis fatwa Kebangsaan dengan orang bijak agam yang lain. Orang bijak agama pun ada masa silap dalam memberikan pendapat kerana mereka tidak mengetahui dengan mendalam mengenai bidang yang bersangkutan dengan pendapat yang diberikan ataupun mungkin kerana tersalah faham mengenai istilah yang digunakan contohnya pernah seorang ulama menyatakan anjing laut adalah najis berat sama seperti anjing mohon utamakan logik dari emosi bila keluarkan pendapar, saya menghormati UZAR kerana beliau membuat homework sebelum memberi pendapat.

Sesungguhnya bukan senang bagi seorang ulama untuk keluarkan fatwa haram atau halal.. Terutamanya dalam bab muamalat sebab ia adalah sangat luas.. Dalam bab muamalat, usul fiqh menyatakan pada dasarnya semua perkara adalah harus melainkan ada dalil yang mengatakan sebaliknya..

Oleh itu saya pasti pihak ulamak telah membuat kajian yang sangat mendalam sebelum mengharuskan atau mengharamkan sesuatu perkara. Oleh itu tidak perlulah disangkal lagi melainkan jika anda mempunyai hujah anda yang lebih kukuh. Maka isu "Kedudukan nilai mata wang dalam pasaran pula adalah tidak tetap dan boleh berubah bila-bila masa sahaja. Kedudukan saham dalam pasaran juga adalah jauh lebih tidak tetap dan boleh berubah bila-bila masa sahaja, tapi saham dihalalkan, forex diharamkan.

Salam, Dear Shany, Allah itu Maha kaya dan limpah kurniaNya di dunia ini sangat luas untuk diterokai. Kenapa harus keadaan economy dunia kini yang dengan gelojoh dikuasai orang bukan Islam disalahkan. Biarkan mereka dengan sistem ecomoni mereka yang batil dan bergelombang dengan riba' sedang mereka kelak akan menerima balasan yang setimpal dari Allah. Adakah kita sebagai orang Islam, mahu mengikuti gerak langkah kebatilan mereka dan putus asa dari terus mencari Rahmat Allah, sedangkan dari Allah sahajalah datangnya segala rezeki?

Kalau kita sangat pentingkan duit dan material, janganlah kita 'generalize'kan untuk org lain. Kalau tak ada hal yang baik untuk dikatakan, adalah lebih baik kita diam dari terus dibebani dengan dosa yang kita tak akan mampu menanggungnya.

Syarikat pelaburan yg sy join ni Jika ada dua fatwa, boleh lah ikut mana-mana yang anda rasa paling kuat.. Tiada salahnya di situ.. Tapi kalau hanya ada satu fatwa sahaja, maka saya berharap kita dapat ikut fatwa yang satu itu.. Barangsiapa diantara kamu nanti yang sempat menemui zaman ini, maka hendaklah ia tidak menjadi pengurus pajak, kakitangan kerajaan dan anggota polis untuk membantu keburukan yang telah mereka lakukan.

Kesimpulan nyer mcm ni laaa.. Mencari sebuah kebenaran itu wajib hukumnya, jadi selama suatu hukum belum ada solusi meski harus dikaji dan dicari jawabannya. Sikap menyerah dan pesimis adalah sikap yang tidak mampu dan termasuk kedalam golongan hamba Allah yang berputus Asa. Saya pun jadi keliru dengan semua ini, forex terdapat beberapa jenis yang mana ada yang diharuskan dan ada yang diharamkan Saya tertarik dengan comment saudara mengenai hukum merokok, malah saya telah membaca fatwa mengenainya di e-fatwa yang mana muzakarah telah memutuskan bahawa hukum merokok adalah haram dari pandangan Islam.

Tetapi masih ramai lagi yang merokok. Siapalah saya untuk mempersoalkan tentang hukum hakam yang diputuskan, apatah lagi memberikan hujah2 mengenainya. Terus terang, saya masih keliru tentang isu forex ini.

Mmg takdinafikan, susah nk cari broker yg betul2 islamic, begitu juga dgn institusi2 kewangan dinegara kita. Hidup kita sekarang ni pun dikelilingi riba Only USA the only country in the world that print their money as they like and their dollar are not based on the gold and the world cant say anything about it.

Anyone who want to discuss it further please go ahead. I love your blog.. My web page - mbk Here is my homepage -. Thanks My blog - vapornine my web site - forex broker. Salam, Akhir zaman memang begini.. Kita orang awam kan takde ilmu, maka wajib mengaji.. Nabi SAW pesan tinggalkan perkara yang meragukan..

Baginda pun jual beli dengan perompak.. Ini kerana, dalam forex terdapat satu istilah harga yang disebut sebagai Bid Price. Bid ni dalam b. Sama seperti kita membida sesuatu dengan harapan kita memperoleh keuntungan daripadanya.. Jadi apa dan dimana sumbangan kita dalam forex ni? The intrinsic worth of paper currencies belonging to different countries differ as these have different purchasing power. Additionally, the intrinsic value or worth of paper currencies cannot be identified or assessed unlike gold and silver which can be weighed.

Hence, neither the presence of riba al-fadl by excess , nor riba al-nasia by deferment can be established. The Shafii school of Fiqh considers the efficient cause illa in case of gold and silver to be their property of being currency thamaniyya or the medium of exchange, unit of account and store of value. This is also the Maliki view. According to one version of this view, even if paper or leather is made the medium of exchange and is given the status of currency, then all the rules pertaining to naqdain, or gold and silver apply to them.

Thus, according to this version, exchange involving currencies of different countries at a rate different from unity is permissible, but must be settled on a spot basis.

Another version of the above two schools of thought is that the above cited efficient cause illa of being currency thamaniyya is specific to gold and silver, and cannot be generalized. That is, any other object, if used as a medium of exchange, cannot be included in their category.

Hence, according to this version, the Sharia injunctions for riba prohibition are not applicable to paper currencies. Currencies belonging to different countries can be exchanged with or without gain and both on a spot or deferred basis. Proponents of the earlier version cite the case of exchange of paper currencies belonging to the same country in defense of their version. The consensus opinion of jurists in this case is that such exchange must be without any gain or at a rate equal to unity and must be settled on a spot basis.

What is the rationale underlying the above decision? If one considers the Hanafi and the first version of Hanbali position then, in this case, only one dimension of the efficient cause illa is present, that is, they belong to the same genus jins.

But paper currencies are neither weighable nor measurable. Hence, Hanafi law would apparently permit exchange of different quantities of the same currency on a spot basis. Similarly if the efficient cause of being currency thamaniyya is specific only to gold and silver, then Shafii and Maliki law would also permit the same.

Needless to say, this amounts to permitting riba-based borrowing and lending. This shows that, it is the first version of the Shafii and Maliki thought which underlies the consensus decision of prohibition of gain and deferred settlement in case of exchange of currencies belonging to the same country.

According to the proponents, extending this logic to exchange of currencies of different countries would imply that exchange with gain or at a rate different from unity is permissible since there no unity of jins , but settlement must be on a spot basis. Bai-sarf is defined in Fiqh literature as an exchange involving thaman haqiqi, defined as gold and silver, which served as the principal medium of exchange for almost all major transactions.

Proponents of the view that any exchange of currencies of different countries is same as bai-sarf argue that in the present age paper currencies have effectively and completely replaced gold and silver as the medium of exchange. Hence, by analogy, exchange involving such currencies should be governed by the same Sharia rules and injunctions as bai-sarf. It is also argued that if deferred settlement by either parties to the contract is permitted, this would open the possibilities of riba-al nasia.

Opponents of categorization of currency exchange with bai-sarf however point out that the exchange of all forms of currency thaman cannot be termed as bai-sarf.

According to this view bai-sarf implies exchange of currencies made of gold and silver thaman haqiqi or naqdain alone and not of money pronounced as such by the state authorities thaman istalahi. The present age currencies are examples of the latter kind. These scholars find support in those writings which assert that if the commodities of exchange are not gold or silver, even if one of these is gold or silver then, the exchange cannot be termed as bai-sarf.

Nor would the stipulations regarding bai-sarf be applicable to such exchanges. A number of similar references exist which indicate that jurists do not classify an exchange of fals thaman istalahi for another fals thaman istalahi or gold or silver thaman haqiqi , as bai-sarf.

Hence, the exchanges of currencies of two different countries which can only qualify as thaman istalahi can not be categorized as bai-sarf. Nor can the constraint regarding spot settlement be imposed on such transactions.

It should be noted here that the definition of bai-sarf is provided Fiqh literature and there is no mention of the same in the holy traditions. The traditions mention about riba, and the sale and purchase of gold and silver naqdain which may be a major source of riba, is described as bai-sarf by the Islamic jurists.

It should also be noted that in Fiqh literature, bai-sarf implies exchange of gold or silver only; whether these are currently being used as medium of exchange or not. Exchange involving dinars and gold ornaments, both quality as bai-sarf. Various jurists have sought to clarify this point and have defined sarf as that exchange in which both the commodities exchanged are in the nature of thaman, not necessarily thaman themselves.

Hence, even when one of the commodities is processed gold say, ornaments , such exchange is called bai-sarf. Proponents of the view that currency exchange should be treated in a manner similar to bai-sarf also derive support from writings of eminent Islamic jurists.

Similar references are available in the writings of Imam Ghazzali5 As far as the views of Imam Sarakhshi is concerned regarding exchange involving fals, according to them, some additional points need to be taken note of. In the early days of Islam, dinars and dirhams made of gold and silver were mostly used as medium of exchange in all major transactions. Only the minor ones were settled with fals. In other words, fals did not possess the characteristics of money or thamaniyya in full and was hardly used as store of value or unit of account and was more in the nature of commodity.

Hence there was no restriction on purchase of the same for gold and silver on a deferred basis. The present day currencies have all the features of thaman and are meant to be thaman only. The exchange involving currencies of different countries is same as bai-sarf with difference of jins and hence, deferred settlement would lead to riba al-nasia.

Dr Mohamed Nejatullah Siddiqui illustrates this possibility with an example6. It appears from the above synthesis of alternative views that the key issue seems to be a correct definition of thamaniyya. For instance, a fundamental question that leads to divergent positions on permissibility relates to whether thamaniyya is specific to gold and silver, or can be associated with anything that performs the functions of money.

We raise some issues below which may be taken into account in any exercise in reconsideration of alternative positions. It should be appreciated that thamaniyya may not be absolute and may vary in degrees. It is true that paper currencies have completely replaced gold and silver as medium of exchange, unit of account and store of value. In this sense, paper currencies can be said to possess thamaniyya. However, this is true for domestic currencies only and may not be true for foreign currencies.

In other words, Indian rupees possess thamaniyya within the geographical boundaries of India only, and do not have any acceptability in US.

These cannot be said to possess thamaniyya in US unless a US citizen can use Indian rupees as a medium of exchange, or unit of account, or store of value. In most cases such a possibility is remote. This possibility is also a function of the exchange rate mechanism in place, such as, convertibility of Indian rupees into US dollars, and whether a fixed or floating exchange rate system is in place. For example, assuming free convertibility of Indian rupees into US dollars and vice versa, and a fixed exchange rate system in which the rupee-dollar exchange rate is not expected to increase or decrease in the foreseeable future, thamaniyya of rupee in US is considerably improved.

The example cited by Dr Nejatullah Siddiqui also appears quite robust under the circumstances. Permission to exchange rupees for dollars on a deferred basis from one end, of course at a rate different from the spot rate official rate which is likely to remain fixed till the date of settlement would be a clear case of interest-based borrowing and lending.

However, if the assumption of fixed exchange rate is relaxed and the present system of fluctuating and volatile exchange rates is assumed to be the case, then it can be shown that the case of riba al-nasia breaks down. We rewrite his example: However, if the latter is true, then the return to the seller or the lender is not predetermined. It need not even be positive. For example, if the rupee-dollar exchange rate increases to 1: Here two points are worth noting.

First, when one assumes a fixed exchange rate regime, the distinction between currencies of different countries gets diluted. The situation becomes similar to exchanging pounds with sterlings currencies belonging to the same country at a fixed rate. Second, when one assumes a volatile exchange rate system, then just as one can visualize lending through the foreign currency market mechanism suggested in the above example , one can also visualize lending through any other organized market such as, for commodities or stocks.

If one replaces dollars for stocks in the above example, it would read as: Hence, just as returns in the stock market or commodity market are Islamically acceptable because of the price risk, so are returns in the currency market because of fluctuations in the prices of currencies.

A unique feature of thaman haqiqi or gold and silver is that the intrinsic worth of the currency is equal to its face value. Thus, the question of different geographical boundaries within which a given currency, such as, dinar or dirham circulates, is completely irrelevant. Gold is gold whether in country A or country B. Thus, when currency of country A made of gold is exchanged for currency of country B, also made of gold, then any deviation of the exchange rate from unity or deferment of settlement by either party cannot be permitted as it would clearly involve riba al-fadl and also riba al-nasia.

However, when paper currencies of country A is exchanged for paper currency of country B, the case may be entirely different. The price risk exchange rate risk , if positive, would eliminate any possibility of riba al-nasia in the exchange with deferred settlement.

However, if price risk exchange rate risk is zero, then such exchange could be a source of riba al-nasia if deferred settlement is permitted7. Another point that merits serious consideration is the possibility that certain currencies may possess thamaniyya, that is, used as a medium of exchange, unit of account, or store of value globally, within the domestic as well as foreign countries. For instance, US dollar is legal tender within US; it is also acceptable as a medium of exchange or unit of account for a large volume of transactions across the globe.

Thus, this specific currency may be said to possesses thamaniyya globally, in which case, jurists may impose the relevant injunctions on exchanges involving this specific currency to prevent riba al-nasia. The fact is that when a currency possesses thamaniyya globally, then economic units using this global currency as the medium of exchange, unit of account or store of value may not be concerned about risk arising from volatility of inter-country exchange rates.

At the same time, it should be recognized that a large majority of currencies do not perform the functions of money except within their national boundaries where these are legal tender. Riba and risk cannot coexist in the same contract. The former connotes a possibility of returns with zero risk and cannot be earned through a market with positive price risk. As has been discussed above, the possibility of riba al-fadl or riba al-nasia may arise in exchange when gold or silver function as thaman; or when the exchange involves paper currencies belonging to the same country; or when the exchange involves currencies of different countries following a fixed exchange rate system.

The last possibility is perhaps unIslamic8 since price or exchange rate of currencies should be allowed to fluctuate freely in line with changes in demand and supply and also because prices should reflect the intrinsic worth or purchasing power of currencies.

The foreign currency markets of today are characterised by volatile exchange rates. The gains or losses made on any transaction in currencies of different countries, are justified by the risk borne by the parties to the contract.

So far, we have discussed views on the permissibility of bai salam in currencies, that is, when the obligation of only one of the parties to the exchange is deferred. What are the views of scholars on deferment of obligations of both parties? Typical example of such contracts are forwards and futures9. According to a large majority of scholars, this is not permissible on various grounds, the most important being the element of risk and uncertainty gharar and the possibility of speculation of a kind which is not permissible.

This is discussed in section 3. However, another ground for rejecting such contracts may be riba prohibition. In the preceding paragraph we have discussed that bai salam in currencies with fluctuating exchange rates can not be used to earn riba because of the presence of currency risk.

It is possible to demonstrate that currency risk can be hedged or reduced to zero with another forward contract transacted simultaneously. And once risk is eliminated, the gain clearly would be riba. We modify and rewrite the same example: Another simple possible way to earn riba may even involve a spot transaction and a simultaneous forward transaction. In effect this implies that he is lending Rs now to the seller of dollars for one month and earns an interest of Rs50 he receives Rs after one month.

This is a typical buy-back or repo repurchase transaction so common in conventional banking. Gharar, unlike riba, does not have a consensus definition.

In broad terms, it connotes risk and uncertainty. It is useful to view gharar as a continuum of risk and uncertainty wherein the extreme point of zero risk is the only point that is well-defined. Beyond this point, gharar becomes a variable and the gharar involved in a real life contract would lie somewhere on this continuum.

Beyond a point on this continuum, risk and uncertainty or gharar becomes unacceptable Jurists have attempted to identify such situations involving forbidden gharar. A major factor that contributes to gharar is inadequate information jahl which increases uncertainty. This is when the terms of exchange, such as, price, objects of exchange, time of settlement etc.

Gharar is also defined in terms of settlement risk or the uncertainty surrounding delivery of the exchanged articles. Islamic scholars have identified the conditions which make a contract uncertain to the extent that it is forbidden. Each party to the contract must be clear as to the quantity, specification, price, time, and place of delivery of the contract. A contract, say, to sell fish in the river involves uncertainty about the subject of exchange, about its delivery, and hence, not Islamically permissible.

The need to eliminate any element of uncertainty inherent in a contract is underscored by a number of traditions. An outcome of excessive gharar or uncertainty is that it leads to the possibility of speculation of a variety which is forbidden.

Speculation in its worst form, is gambling. The holy Quran and the traditions of the holy prophet explicitly prohibit gains made from games of chance which involve unearned income.

The term used for gambling is maisir which literally means getting something too easily, getting a profit without working for it. Apart from pure games of chance, the holy prophet also forbade actions which generated unearned incomes without much productive efforts. Here it may be noted that the term speculation has different connotations. It always involves an attempt to predict the future outcome of an event. But the process may or may not be backed by collection, analysis and interpretation of relevant information.

The former case is very much in conformity with Islamic rationality. An Islamic economic unit is required to assume risk after making a proper assessment of risk with the help of information. All business decisions involve speculation in this sense. It is only in the absence of information or under conditions of excessive gharar or uncertainty that speculation is akin to a game of chance and is reprehensible.

Considering the case of the basic exchange contracts highlighted in section 1, it may be noted that the third type of contract where settlement by both the parties is deferred to a future date is forbidden, according to a large majority of jurists on grounds of excessive gharar. Futures and forwards in currencies are examples of such contracts under which two parties become obliged to exchange currencies of two different countries at a known rate at the end of a known time period.

The contract is settled when both the parties honour their obligations on the future date. Traditionally, an overwhelming majority of Sharia scholars have disapproved such contracts on several grounds.

The prohibition applies to all such contracts where the obligations of both parties are deferred to a future date, including contracts involving exchange of currencies. An important objection is that such a contract involves sale of a non-existent object or of an object not in the possession of the seller. This objection is based on several traditions of the holy prophet.

There is, however, a general agreement on the view that the efficient cause illa of the prohibition of sale of an object which the seller does not own or of sale prior to taking possession is gharar, or the possible failure to deliver the goods purchased. Is this efficient cause illa present in an exchange involving future contracts in currencies of different countries?

In a market with full and free convertibility or no constraints on the supply of currencies, the probability of failure to deliver the same on the maturity date should be no cause for concern. Further, the standardized nature of futures contracts and transparent operating procedures on the organized futures markets15 is believed to minimize this probability. Some recent scholars have opined in the light of the above that futures, in general, should be permissible.

According to them, the efficient cause illa , that is, the probability of failure to deliver was quite relevant in a simple, primitive and unorganized market. It is no longer relevant in the organized futures markets of today Such contention, however, continues to be rejected by the majority of scholars.

They underscore the fact that futures contracts almost never involve delivery by both parties. On the contrary, parties to the contract reverse the transaction and the contract is settled in price difference only. For example, in the above example, if the currency exchange rate changes to 1: This would imply A making a gain of Rs50 the difference between Rs and Rs This is exactly what B would lose.

It may so happen that the exchange rate would change to 1: This obviously is a zero-sum game in which the gain of one party is exactly equal to the loss of the other. This possibility of gains or losses which theoretically can touch infinity encourages economic units to speculate on the future direction of exchange rates. Since exchange rates fluctuate randomly, gains and losses are random too and the game is reduced to a game of chance. There is a vast body of literature on the forecastability of exchange rates and a large majority of empirical studies have provided supporting evidence on the futility of any attempt to make short-run predictions.

Exchange rates are volatile and remain unpredictable at least for the large majority of market participants. Needless to say, any attempt to speculate in the hope of the theoretically infinite gains is, in all likelihood, a game of chance for such participants. While the gains, if they materialize, are in the nature of maisir or unearned gains, the possibility of equally massive losses do indicate a possibility of default by the loser and hence, gharar.

Hedging or risk reduction adds to planning and managerial efficiency. The economic justification of futures and forwards is in term of their role as a device for hedging. In the context of currency markets which are characterized by volatile rates, such contracts are believed to enable the parties to transfer and eliminate risk arising out of such fluctuations.

In this case, A is able to hedge his position and at the same time, forgoes the opportunity of making a gain if his expectations do not materialize and US dollar appreciates against Indian rupee say, to 1: While hedging tools always improve planning and hence, performance, it should be noted that the intention of the contracting party — whether to hedge or to speculate, can never be ascertained.

It may be noted that hedging can also be accomplished with bai salam in currencies. There would be an immediate cash inflow in Rs for him.

The question may be, why should the counterparty pay him rupees now in lieu of a promise to be repaid in dollars after one month. As in the case of futures, the counterparty would do so for profit, if its expectations are diametrically opposite, that is, it expects dollar to appreciate. For example, if dollar appreciates to 1: