According to investopedia.com, Foreign Exchange (forex or FX) is the trading of one currency for another. For example, one can swap the U.S. dollar for the euro. Foreign exchange transactions can take place on the foreign exchange market, also known as the Forex Market.
What does Islam say on online Forex Trading?
Under the username @MFairuzIzwan, he has spoken about this issue and what he thinks about Forex in Islam.
“I don’t do Forex, I don’t do day trading. I find it very risky and I have a day job for me to attend to rather than just focusing on Forex trading,” he listed his first reason.
For the second one, he points out that financial gurus always show their profit, but they never show their losses, which is why Forex has a bad reputation.
Forex involves paired currency exchange, where the trader either gains loss or profit from their trade – of course, this depends on the factors above, like economy strive. Not to mention that the Malaysian Ringgit (MYR) costs much less than 1USD, making the odds of someone gaining profit is never determined.
For his third reason, Forex is deemed ‘haram’ by the Security Commission Shariah Advisory Council of Malaysia.
According to a post by the Federal Territory Mufti Department, an in-depth discussion has taken place, and it is found that Forex has many gambling properties, like technical analysis and “probabilities”. Not only that, but they have acts of usury or interests, which is already specifically stated as ‘haram’ in Islam.
“This is because each transaction has a “rollover interest”, the requirement to do business by being in debt through leverage, a vague possession during exchange transactions, the selling of money that is not ours, and finally, speculation that involves gambling.
These properties are not allowed by the laws of the Malaysian Government.
This is however excluded from licensed businesses that trade foreign money, as they do not clash with the rules set by Islam.
For the time being, the discussion has brought the Muftis to agree that the foreign exchange transactions, or known as the Forex, is not permissible in Islam.”
Source: Twitter MFairuzIzwan, Forextime, Facebook of Federal Territory Mufti Department