Fatwaa ID: 377
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?
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
06/20/1444 AH – 01/13/2023 CE | AMG3-3161
وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين
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