SS 1 – Trading in Currencies

The purpose of this standard is to explain the Shari’ah rulings relating to trading in currencies, as well as the conditions and precepts laid down by the Shari’ah as to what is permissible in currency trading and what is not. The standard also explains some of the practices being applied by Islamic financial Institutions. financial Institutions.

The word (Institution/Institutions) is used here to refer, in short, to Islamic financial institutions including Islamic Banks.

Scope of the Standard

This standard covers issues of both actual and constructive possession of currencies, the use of modern means of communication in currency trading, exchange of currencies in the context of the bilateral settlement of debts owed by the parties to the exchange, dealing in currencies in money markets, bilateral promises to buy and sell currencies, deferment of the delivery of one of two countervalues in currency trading, and some cases practised by the Institutions. The standard does not cover the following cases: those where there are no trading in currencies; the effect of goldsmithery in selling gold and silver; transfers of debts that do not involve exchanges of currency; and the discounting of bills of exchange.