Assalamu Alaikum I just watched your video about forex trade on YouTube and I understand all the fault that it has, but there is another type of transaction I want to confirm whether its permissible or not
What if I deposited money using a different currency which is naira to my fx account(broker) which turns the naira to us dollar for me to use it to trade,but I don’t use it I just deposit it so that I can have the opportunity to withdraw it back to naira once the exchange rate of naira to dollar increases so that I can make profit from the increase. As you can see this isnt trading with leverage or margin but just deposit that I can benefit from once the rate increases. Please is this permissible for me.
Wa alaykum salaam,
If the converted currency is still opening an FX position and gaining/losing from the trade, then it attracts the same issues as FX and would not be Shariah compliant
Allah knows best
Thanks for the reply mufti. It doesn’t involve opening any position or trading, let me make this example.
Let’s say I went to the bank and bought some dollars using a different currency(naira)that I sold to them and let’s say the exchange rate to get 1dollar is 100naira at the time I sold it, but I didn’t collect the dollar I bought, with this the issue of me not having complete ownership of what I bought arises here. But the dollar stays with them and the exchange rate increases and I can withdraw it at any time even immediately but not as dollar but as naira that means they will sell the naira back to me and I don’t need to give them any dollar because its already with them remember I didn’t collect it and the naira rate increases to 200 and i collect back the 200 with a 100 naira profit
The issue I see here is not having ownership of what I bought but I can demand for them to sell back my naira to me immediately.
So this is what I was trying to explain in the previous question it all happens with the broker, please I would like to see your opinion of this with my elaborated explanation whether your reply with this is still the same, thank you