A question regarding trading in the Forex market with an Islamic account and the implications of using leverage.
[AR_ID:4846]
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1 Answer
Peace be upon you.
Ayatollah Khamenei (may Allah protect him):
The validity of transactions in this market depends on adhering to Sharia and legal regulations.
* According to some experts, Forex brokers can be divided into two categories: the first category, which includes most brokers, consists of those who have merely created a virtual page on the internet without a real presence in the currency market. This category receives clients' funds and uses them to achieve their own goals and programs, providing only a page on the internet through which clients conduct transactions that appear to be buying and selling foreign currencies. Consequently, the transactions conducted are not real and are invalid, and do not confer ownership of the profits obtained.
The second category consists of genuine brokers who have a real presence in the currency market and buy and sell currencies with clients' funds. This is permissible as long as Sharia and legal regulations are observed, but attention must be paid to the following points:
1. Transactions must be conducted realistically, ensuring that there is actual buying and selling of currencies. Therefore, if profits are made based on predicting currency price fluctuations, this is not permissible, and it is also not valid to sell one currency for another of the same kind.
2. Transactions involving leverage—obtained through borrowing from the broker—if they are essentially a loan with interest, constitute usury (riba) and are forbidden.
Source: Special Inquiry.
Ayatollah Sistani (may Allah protect him):
His Eminence does not express an opinion on the operations of such companies or working with them.
Source: Special Inquiry.
May you be successful in all good.