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Trade of foreign exchange currency (Forex) and shares in Islam


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Author Topic: Trade of foreign exchange currency (Forex) and shares in Islam  (Read 52 times)
Hassium
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« on: March 12, 2021, 12:52:41 am »
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Assalamualaikum wrt dearest friends of Mv

As you may already be aware, many people have taken up the trade of Forex and shares as a means of income, primarily using their home address linked bank account as a base.

Whilst I have long carried an interest in also engaging in such financial activities, I am unsure of the legality in terms of Islamic principles in the conduct of these trades. Mainstream Islamic discourse strongly advice against these form of trade, claiming these involve high elements of gambling and uncertainties. In addition, it's impossible to isolate halal incomes from haraam, considering the share and Forex market take money from any and all sources as capital for reinvestment including money gained illegally such as from the trade of forbidden goods like alcohol and cigarettes, among others.

As such I would like to humbly request the viewpoints of Mv team on engaging in such trading for me to reflect upon whether it's worth delving into or I should stay away from.

Jazakallahu khayran and thank you in advance for your valuable time and wisdom



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Zeynab
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« Reply #1 on: March 12, 2021, 03:33:55 am »
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Walaikum As-Salaam brother Hassium.  Unfortunately we don't have much experience in this field though we may be able to offer some basic information on its nature pertaining to Halal and Haram.  From what I know, mainstream Muslim scholars in the West generally view it as permissible. But there are certain guidelines for adherence, that is, not trading in goods that are Haram such as (you mentioned) alcohol, weapons etc.  I would say, this is definitely Haram not just in the sphere of stocks & shares but also if someone is running a store selling such items would be Haram.  Moreover, the scholars' guidelines are basically to monitor yourself that you don't invest in companies that are not considered in compliant with Shariah or if the bulk of your income comes through interest earned.  The fact that the foreign exchange market can fluctuate and so can stocks & shares (having similarity with the aspect of gambling) hasn't raised too many eyebrows among our scholars as far as I know.

If you have the time, please read this article with information on Halal investing and a brief video of Dr. (Sheikh) Yasir Qadhi.   You can pick the fields of investment you're interested, and Insh'Allah, hopefully it may provide you with some helpful information you're looking for.

By the way, in just about all Muslim countries investing money in banks and earning "interest" is never seen as Haram including Saudi Arabia.  Even in Iran and Pakistan bank investments officially pay 'interest.'  The concept is that the Quranic term "riba" does not imply to this type of interest.  It implies to lending money on a one-on-one basis and extracting interest with oppressive rates and tough deadlines causing financial ruin of the poor borrower.  Bank investment is essentially similar to a syndicate or consortium where every participant benefits from their share of profit, and no one is treated unjustly nor financially harassed .. making it very different from the usual lender-borrower relationship (the system referred in the Noble Quran) which particularly used to be very oppressive in earlier times.   I think this makes sense.

However, from what I see, paying mortgage to banks should be Haram as it's similar to the practice referred in the Noble Quran with banks charging exorbitant interest rates from individual clients that often causes tremendous hardships for persons or families at the borrowing end ... much on the lines of Shylock the Jew and Antonio's pound of flesh kind of story.   This is precisely the kind of "riba" prohibited by Allah Almighty.  Alhumdulilah. 


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Hassium
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« Reply #2 on: March 12, 2021, 04:26:04 am »
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Alhamdulillah Sr Zeynab I do have the time but unfortunately I feel hopelessly out of depth when trying to understand the nuances of these activities. Hence I hoped that perhaps the members here may already developed an understanding that they were willing to share.

The primary issue I have read with forex is the commodification of currency, and the lack of oversight over the trading platform often run from mysterious tax havens. Islamically, Allah told us to not destroy ourselves with our own hands which I feel may be relevant here.

Anyhow, I will spend more time reading on it from the link you provided as well as material available from mainstream web pages. Thank you and Allah bless.

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« Reply #3 on: March 12, 2021, 01:32:32 pm »
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Alhamdulillah Sr Zeynab I do have the time but unfortunately I feel hopelessly out of depth when trying to understand the nuances of these activities. Hence I hoped that perhaps the members here may already developed an understanding that they were willing to share.



Yes, it's somewhat confusing because different Islamic sources have differing views.  I would suggest do whatever research you can and at the end of the day, decide what you feel comfortable with.  That's what everyone does. 

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« Reply #4 on: March 12, 2021, 07:42:57 pm »
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To be honest and very unfortunately, in the present world, it's next to impossible (if not impossible) to find a business that's wholly Halal. 

Even our Muslim scholars and jurists who may speak very sensibly and convincingly about Islamically accepted businesses and banking etc., don't do what they speak about.  They do their banking and businesses much like anyone else .. probably not because they want to but because the secular communities have structured the system in such a way that you cannot evade all its prerequisites. 

I have quite a few friends (Muslim brothers of course) who're in stocks & shares and the cash flow business.  In my opinion, this business itself is Halal just as long as it's not dealing with any material object that's Haram.  E.g.  If you buy shares of Facebook it's fine.  But if you buy shares of LCBO (the liquor store) it's Haram.   The market fluctuations creating the gambling atmosphere is not gambling. It's not like buying a lottery ticket or dishing your money in a casino.  Stocks, shares and forex market  can be volatile because of changing political and economical conditions, climate, pandemics etc. and no one knows the future except Allah Almighty.  That's the way it is in every sphere of life.  This business may not be the most reliable and peaceful source of income, but it cannot be labeled as gambling nor does it necessarily have to be Haram. 

Sister Zeynab's information on interest was sensible. I also agree that at the end of it all, one needs to decide what makes them feel at ease.  There's no need to worry and lose one's peace of mind over the issue. "Each one does according to his rule of conduct, and your Rab is Best Aware of him whose way is right."  17:84.  And Allah is Merciful and He is Understanding.  He is well aware how tough this world is for a believer.
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