CAIRO - Malaysia's Ulema have issued a fatwa banning Muslim individuals from foreign exchange trading, The Star newspaper reported.
"A study by the committee found that such trading involves currency speculation, which contradicts Islamic law, Dr Abdul Shukor Husin, chairman of the National Fatwa Council, said.
For that reason, the National Fatwa Council has decided that it is haram for Muslims to participate in such trading.
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The foreign exchange market (Forex) is a global, worldwide-decentralized financial market for trading currencies.
Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock.
The foreign exchange market determines the relative values of different currencies.
In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency.
The Muslim body said that forex trading by individuals creates confusion among the faithful.
There are many doubts about it (forex trading) and it involves individuals using the Internet, with uncertain outcomes," Husin said.
The Fatwa Council, however, allowed forex trading by money changers or between banks.
"Other forms of trading in foreign currencies, such as trading by money changers or between banks, are permissible as they do not involve currency speculation or uncertain outcomes," Husin said.
Islam lays out a strict code of ethics for business that forbids speculation and usury.Muslim Malays form about 60 percent of Malaysia's 26-million population, while Christians make up around 9.1 percent.
Reproduced with permission from OnIslam.net