How to buy and sell rare currencies without approaching riba?
The Qur'an provides guidance on financial transactions, particularly emphasizing the prohibition of usury (riba) and encouraging fair trade practices. In Surah Al-Baqarah, Allah states: Those who swallow usury cannot rise up save as he ariseth whom the devil hath prostrated by (his) touch. That is because they say: Trade is just like usury; whereas Allah permitteth trading and forbiddeth usury.
2:275. This verse highlights that while trade is permitted, riba is forbidden, and it clarifies the distinction between the two.
To engage in buying and selling rare currencies without falling into riba, one must ensure that transactions are conducted fairly and transparently. When trading currencies, it is essential to adhere to the principle of "hand to hand" transactions, meaning that the exchange should occur simultaneously and at equal value to avoid any form of riba. This aligns with the teachings of the Prophet Muhammad ﷺ, who stated that in currency exchanges, it is permissible as long as they are done hand to hand
and without delay Sahih al-Bukhari 34:14.
Additionally, it is crucial to avoid speculative practices or transactions that could lead to uncertainty (gharar) or unjust enrichment. Engaging in fair trade means ensuring that both parties have a clear understanding of the terms and conditions of the exchange and that they are both satisfied with the deal. As Ibn Kathir explains, the focus should be on equity and justice in transactions to maintain the integrity of trade.
In summary, to buy and sell rare currencies without approaching riba, ensure that transactions are conducted simultaneously, at equal value, and with clarity and fairness, adhering to the principles laid out in the Qur'an and the teachings of the Prophet ﷺ.
Sources
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2:275 · Al-Baqara
2:275 · Muhammad Marmaduke Pickthall
ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَٰنُ مِنَ ٱلْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ ۗ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ ۚ فَمَن جَآءَهُۥ مَوْعِظَةٌۭ مِّن رَّبِّهِۦ فَٱنتَهَىٰ فَلَهُۥ مَا سَلَفَ وَأَمْرُهُۥٓ إِلَى ٱللَّهِ ۖ وَمَنْ عَادَ فَأُو۟لَٰٓئِكَ أَصْحَٰبُ ٱلنَّارِ ۖ هُمْ فِيهَا خَٰلِدُونَ
Those who swallow usury cannot rise up save as he ariseth whom the devil hath prostrated by (his) touch. That is because they say: Trade is just like usury; whereas Allah permitteth trading and forbiddeth usury. He unto whom an admonition from his Lord cometh, and (he) refraineth (in obedience thereto), he shall keep (the profits of) that which is past, and his affair (henceforth) is with Allah. As for him who returneth (to usury) - Such are rightful owners of the Fire. They will abide therein.
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Sahih al-Bukhari 34:14
Sahih al-Bukhari · Book 34, Hadith 14 · Narrated by Abi al-Mundhir
Ibn Jurayj narrated from Amr bin Dinar that Abu al-Munhal said: I used to trade in currency exchange. I asked Zaid bin Arqam, who said the Prophet (ﷺ) said: 'If it is a hand-to-hand transaction, there is no harm; but if it involves women, it is not permissible.' Also, al-Fadl bin Ya'qub narrated from Al-Hajjaj bin Muhammad, who recounts that Ibn Jurayj told him that Amr bin Dinar and Amir bin Mus'ab said they heard Abu al-Munhal say: I asked Al-Bara bin Azib and Zaid bin Arqam about currency exchange. They said: We were traders during the time of the Messenger of Allah (ﷺ). We asked him about currency exchange, and he said: If the exchange is hand to hand, there is no harm; but if it is deferred, it is not permissible.
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