Q: Is online Forex trading aloud in islam?
A:According to our research, Forex Trading is not allowed. Forex is basically trading over the internet without physical possession and delivery of currency. Shari'ah has placed certain restrictions on currency trading so that Muslims can be safeguarded from Ribaa or interest. One condition is that at least one of the two currencies being traded in has to be taken possession of in a physical sense. This does not happen in Forex trade. In fact, from one angle it appears that this type of trading is more ‘virtual’, ‘imaginary’, and ‘figurative’ for one sells dollars in exchange for yen, for example, but the trader neither owns the dollars nor the yen. Any profit earned in such a deal will be equivalent to interest or riba. This is obviously not allowed in Shari'ah.
And Allah Ta’aala knows best
PS. For an in depth look at the Forex Trading get-up against Shari'ah Law, our files are available on request. However one will need some knowledge of the technical terms of Fiqh in order to understand these writings.
Mufti Siraj Desai