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Fatwa CenterDealing in foreign currency
Question
Is it halal OR haram? I deal in foriegn currency exchange. The deal is one of the 2 forms as follow:1. (Long Position) The first one is putting 1000 US dollars with the broker and he gives me 100,000 US dollars. I then buy any currency. When this currency goes up in value, I then sell it and get back the US dollars. I return the same 100, 000 back to the broker without interest, no matter how long I hold the currency. However, he gets 3 US dollar as a fee for services. The second form of dealing :2. (Short Position) After putting 1000 US dollars with the broker, I sell a currency worth of 100, 000 US dollar. When this currency go down in value, I buy it back, thus I make more dollars. Again, I then return the 100,000 US dollar back to the broker without any interest, but with 3 US dollar service fee. I can maintain this position as long as I want.
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His slave and Messenger.
In principle, the system of stock exchange that is now used worldwide is forbidden, as it obliges the person to take loans with interest, and at the same time, it does not allow the normal handing over of sums if the amount is big. This delays the immediate hand-to-hand delivery, which is a condition of validity.
But the person can sometimes make his transaction with currency exchange market valid. As for your transaction, it can be valid if it meets the following two conditions:
1- The three dollars you pay to the broker should be for the service he provides and that service should deserve such amount. So, it should not be against lending you the money.
2- The contract should not include any condition whereby you will be obliged to pay Riba (interest and usury) in case of incurring a loss or delay in paying, etc.
We notify you that you should make sure that you fulfill the conditions that govern the validity of currency exchange. First, the amount should be handed over before you and your partner separate, i.e. in the same meeting of the contract. This can be done by transferring your amount into his account and he transfers his amount in your account before you break contact.
Apparently, the party you are dealing with deals with Riba and gives loans to its customers with interest.
No doubt, that dealing with such a party is - at least - dislikable as it mixes lawful and unlawful money, even if the conditions of validity stated above are met.
Anyway, you should make sure that the money you give (3 dollars) is in fact against a real service that normally deserves such an amount. It is a condition that this amount does not exceed the normal amount given against a similar service. If all the above conditions are met, then you can deal with this broker otherwise you should not. But, we advise you to avoid dealing with this man as he undoubtedly deals in Riba.
Allah Knows best.
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