Is Paper Currency formed by haram means: For running the budget of the country, Treasury gets money by issuing bonds to financial institutions eg: investment banks etc. and those bonds are paid earlier by the country’s central bank on low interest rates by means of a cheaque issued without having balance in the account of the central bank but rather allows those banks to print money(cheaque issued as a written acknowledgment to print money) and banks use this money to buy those bonds again. In this way the who cycle repeats and treasury piles up the money and sends it to the different government dipartments to meet the country’s expenses. So Is paper currency haram because of the haram basis(based on riba)?My question is related on the above explanation that wheather forex trading is halal or haram because it involves paper currency directly and because of controlling the supply and demand of the currencies involve in it which ultimately decrease the purchase power of the country’s people and they are able to purchase less things than before.Because of the basis of the formation of paper currencies and the forex trader’s activities mentioned above I’ve these following doubts :1. Will it be considered transgressing the limits by doing the forex trading instead of doing other tradings ?.(Does the rule of using haram things in case of the chief necessity applies here?)2. Does the rule of not doing the trading of haram things like idols, pig and other forbidden animals apply on forex trading also?(Because of it’s haram basis)3. Is it illegal hoarding of money?4. Is this the illegal exploitation of the rights of general people by decreasing their purchasing power for the own benifits of forex traders?Note: By forex traders I mean individuals not exchange markets.
Answer:
All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.
The means and regulations you mentioned that are used by the country to control the printing of banknotes, even if they include Riba-based transactions, they do not affect the permissibility or prohibition of dealing with banknotes printed by the country. If a person obtains such banknotes in a lawful way, then they are lawful for him.
As regards what is known as Forex trading, the fact is that in general it involves Islamic prohibitions, but it becomes permissible if it is devoid of these prohibitions and abides by the Sharee’ah rulings in exchanging money. Hence, Forex trading is not like trading in what is forbidden, such as pigs, idols and so on.
Among the basic principles of Islamic sharee’ah is that cases of necessity make forbidden things permissible. For more benefit, please refer to Fataawa 310036, 88426, and 88475.
As for the effect of currency trading on the purchasing power of the currency or the hoarding of funds, then if the country considers that the trade of individuals in currencies harms the economy, then they have the right to prevent it and people are obliged in this case to abide by this.
Allah knows best.