Is it Halal or Haram is Forex Trading?

Lately trading is being discussed everywhere. The reason is that with trading, many say we will easily get money more quickly and practically, of course.

But how is this forex trading position according to the Islamic view? Is forex trading halal or haram according to Islam?

Forex trading is the activity of exchanging two currencies at the exchange rate and delivery date specified at the time of the transaction. This market is the largest and most liquid in the world, with daily trading volumes in the trillions of dollars.

When trading, two currency elements are paired to form a currency pair consisting of a reference currency and a counterparty currency. For example, if you want to buy USD and convert it to Indonesian Rupiah, the currency pair is USD/IDR.

The forex market has 3 types of transactions including:

1. Spot Transactions
2. Forward Transactions
3. Swap Transactions

Speculation about Sharia law in currency trading often ends in gray. Different perceptions about their status in the eyes of Sharia often make potential investors hesitate to try the forex market. Reporting from Problemmedia.com, Forex according to Islam can be declared halal if it does not contain three haram elements: usury or interest, gharar or uncertainty and qimar which is speculation.

In fact, Islamic finance scholars and experts still have many different views on forwards and swaps. However, one of the similarities is that the transaction can be halal if it fulfills the element of benefit.

The practice of hedging and swapping is further embodied in the international consensus on the principles of Sharia law, which has become a major requirement in this era. According to the official Islamic Finance website, several Islamic banks that operate the foreign exchange market apply Sharia principles for foreign exchange transactions.

This principle is achieved by avoiding the three most avoidable elements of financial transactions described above. All three are subjective, depending on the context of the transaction. Therefore, according to Islam, Forex can be declared halal depending on the environment in which the transaction is carried out.

Hedging futures contracts by banks is no longer seen as speculation, but as a mechanism to reduce volatility in the world foreign exchange market. By meeting Shariah requirements, such as purely non-speculative practices, hedging practices are no longer classified as Shariah banking.

In addition, Islamic banks such as wa'ad (binding), murabahah (sales and purchase agreements), musawamah (sales and purchases at an agreed price after bargaining) and Tawaruq also apply swaps based on Sharia contracts. (Buy on credit and sell). again using the cash payment method).

A clear contract in the practice of buying and selling ensures that both parties are not harmed by the transactions that occur. Therefore, this transaction complies with the elements of Sharia law.

As written in bisaskul.com, so far MUI has only given a halal label to one of the three common foreign exchange trades, namely spot trading. Due to the complexity of the international transaction mechanism, the transaction is considered cash even though it takes two days to complete.

However, the spot transactions referred to by MUI involve two other types of transactions, forward and swap, which are related to the foreign exchange regulation mechanism carried out by banks, namely foreign exchange reserves. Given the breadth of the financial world and the rapid development of the times, MUI needs further scrutiny so that this decision is not ambiguous.

sources: https://soalmedia.com