Currency Exchange (Al-Sarf)
Foreign exchange and cross-currency transactions
Currency exchange (al-sarf) is permissible for genuine commercial needs when conducted spot (hand-to-hand). Forward FX contracts for speculative purposes are impermissible. Hedging structures using wa'd may be permissible.
Full Ruling
DSN-MUI Fatwa 28 rules: (1) Spot currency exchange (taqabud fi al-majlis — taking possession in the session) is permissible for genuine commercial purposes. (2) Forward currency exchange for speculative purposes is prohibited. (3) Swap transactions involving deferred exchange of different currencies are prohibited. (4) FX transactions through regulated money changers or licensed banks for commercial, travel, or remittance purposes are permissible provided exchange is at the prevailing spot rate with immediate settlement.
Rationale & Reasoning
Currency is treated as a ribawi commodity (similar to gold/silver). The same rules of simultaneity and absence of riba apply. Spot FX serves genuine economic purposes and is permissible; speculative FX trading introduces both riba (through deferral) and maysir (gambling on rate movements).
Rule Basis (Daleel)
- 01Ribawi rules applied to currency (thaman istilahi)
- 02DSN-MUI Fatwa 28
- 03Prohibition of speculation on currencies
Conditions for Permissibility
- ✓Exchange must be at spot rate
- ✓Settlement must be immediate (T+2 or less)
- ✓Genuine commercial purpose (not speculation)
- ✓No built-in buy-back obligation at a different rate
Citations & Sources
DSN-MUI Fatwa No. 28 – Currency Exchange (Jual Beli Mata Uang / Al-Sharf)
Dewan Syariah Nasional – MUI Indonesia · 2002
Ref: 28/DSN-MUI/III/2002