Monday, February 6, 2023
No menu items!

Money transfer and exchange

Fatwaa ID: 377

Question:
AsslamOalaikum

Can I transfer money from usd <-> usd to friend, And he exchanges me equivalent amount in local currency back home at a mutually agreeable rate which is different from prevailing market rate?

Answer:
In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.

In principle, if one sells a currency for another type of currency, for example dollars in exchange of euros, and it is a cash/spot transaction where both currencies are exchanged immediately, then the rate of the currencies could be mutually agreed upon. The rate in this case does not have to be on the market value or spot rate.

If however the exchange of currencies is a one sided credit, for example the dollars are on cash and the euros on credit, then the rate has to be on the market value.

If both sides are on credit, then that transaction itself is not permissible.

In the enquired situation where one side is credit, it will be necessary to exchange according to the market rate. You may NOT exchange on a mutually agreed rate.

And Allaah Ta’aala knows best.
Mufti Muajul I. Chowdhury
Darul Iftaa New York
https://askthemufti.us/

06/20/1444 AH – 01/13/2023 CE | AMG3-3161

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين

__________________
Disclaimer

Darul Iftaa New York answers questions on issues pertaining to Shari’ah. These questions and answers are placed for public view on askthemufti.us for educational purposes. The rulings given here are based on the questions posed and should be read in conjunction with the questions. Many answers are unique to a particular scenario and cannot be taken as a basis to establish a ruling in another situation. 

Darul Iftaa New York bears no responsibility with regard to its answers being used out of their intended contexts, nor with regard to any loss or damage that may be caused by acting on its answers or not doing so.

References and links to other websites should not be taken as an endorsement of all contents of those websites. 

Answers may not be used as evidence in any court of law without prior written consent of Darul Iftaa New York.