Ruling of Ancient Money Trading
Assalamu’alaikum. I’d like to ask about what is the ruling of ancient money/currency trading? For example, for IDR 1,- of the ancient money, the buyer should pay the price of IDR 15.000,-. Is it considered as usury? Since recently, there were many dowries that were paid using the nominal unit of rupiah, such as IDR 14,-. Please explain it to us, may Allah reward you with plenty of goodnesses.
Wa ‘alaikumus salam
In the name of Allah, peace and prayer of Allah be upon His messenger.
Firstly, among the rules regarding the exchange of similar currency is that it should be exchanged in cash and similar nominal or amount. For example, we are allowed to exchange IDR 20.000 with the smaller fractions of IDR 5000,-. The exchange process must be carried out in cash, with the similar amount of money being exchanged. A bill of IDR 20.000,- could be exchanged with 4 bills of IDR 5000,-. If the IDR 5000 were just three sheets of bills, and the last one came later, the transaction was not permitted because it was a form of usury.
The case is different with the exchange between different currencies. For example, between rupiah and dollar. The exchange process must be carried out in cash, even though the amount is different. For example, we are allowed to exchange $1 with IDR 10.000,-, as long as the money is in cash form.
This principle is based on the saying of the Prophet – peace and prayer of Allah be upon him-:
الذَّهَبُ بِالذَّهَبِ رِبًا إِلَّا هَاءَ وَهَاءَ
Gold (exchanged) with gold is (a form of) usury, except that (the transaction) is carried out by cash on the spot of agreement. (Narrated by Bukhari no. 2134)
And in another hadith, the Messenger of Allah -peace and prayer of Allah be upon him- said,
لاَ تَبِيعُوا الذَّهَبَ بِالذَّهَبِ إِلَّا مِثْلًا بِمِثْلٍ، وَلاَ تُشِفُّوا بَعْضَهَا عَلَى بَعْضٍ، وَلاَ تَبِيعُوا الوَرِقَ بِالوَرِقِ إِلَّا مِثْلًا بِمِثْلٍ، وَلاَ تُشِفُّوا بَعْضَهَا عَلَى بَعْضٍ، وَلاَ تَبِيعُوا مِنْهَا غَائِبًا بِنَاجِزٍ
Don’t sell gold with gold, except the weight is equal. Don’t add the weight of one part over the other. Don’t sell silver with silver, one of those is in cash (form) while the other is postponed (in debt).” (Narrated by Bukhari no. 2177).
In the hadith above, the Messenger of Allah -peace and prayer of Allah be upon him- explained about the rules in exchanging gold and silver. That is, upon exchanging gold with gold, or silver with silver, then the weight must be equal and it must carried out in cash form. Whereas for the exchange between different entities, for example between gold and silver, a difference in weight is allowed, but it still have to be accomplished in cash form.
Gold and silver were the currency at the time of the Prophet -peace and prayer of Allah be upon him- and his companions. Therefore, the scholars have confirmed that the rules in currency exchange should follow the rules of gold and silver exchange.
Secondly, what is the reason behind the prohibition of exchanging gold or silver which weights are not equal, or not been carried out in cash form?
The scholars have different opinions regarding the reason of this prohibition. There are 3 major stances regarding this matter:
The reason lies on the weigh (the scale). Which means that gold and silver are not allowed to be exchanged but with special rules, because both stuffs are weighed. This is the opinion of an Nakha’i, az Zuhri, ats Tsauri, and the famous opinion issued by Imam Ahmad. But this is a weak opinion, since if the reason is because gold and silver are weighed stuffs, then the rules should certainly be applied on every weighed commodities, such as copper, foodstuffs, oil, etc. Whereas the scholars have agreed that the trading of such stuffs in credit is allowed.
The reason is because of ghalabah tsamaniya (what generally used as currency). It. means that the sophisticated rules are only applied on goods that are generally used as currency, and what generally used as currency are gold and silver. This is a famous opinion of Imam Malik and Shafi’i. However, it is also slightly incorrect, because by saying that the reason is this general use, the application of the rules will certainly be strictly confined, since a reason that couldn’t be used in another cause, couldn’t be used as a reason. Besides, the wisdom beneath the prohibition of usury in currency exchange is not exclusively for gold and silver.
Thirdly, the reason is muthlaq tsamaniya (any goods/stuffs that could be used as currency). It means that the sophisticated rule of exchange applies on any goods thar could be used as currency, although it is in the form of bills, metal, etc. This was one of the opinion of Imam Abu Hanifa, Imam Malik, and Imam Ahmad, and this was the chosen opinion of Sheikh al Islam and Ibn al Qoyyim.
This third opinion is the closest one to the truth, because the reason comprises all kind of currencies, which is the target of usury practice.
Source: Fatwa issued by the Lajnah Daimah in http://www.alifta.net/Fatawa/fatawaDetails.aspx?View=Page&PageID=17&PageNo=1&BookID=1
Imam Ibn Uthaymeen -may Allah have mercy on him- once was asked about the ruling of ancient money trading, and his answer was,
ليس فيه بأس ؛ لأن العملة القديمة أصبحت غير نقد ، فإذا كان مثلاً عنده من فئة الريال الأولى الحمراء أو من فئة خمسة أو عشرة التي بطل التعامل بها وأراد أن يبيع ذات العشرة بمائة فلا حرج ؛ لكونها أصبحت سلعة ليست بنقد ، فلا حرج
There’s nothing wrong with it. Because the ancient money/currency is no longer considered as exchange tool. For example, there was a person who have several bills of ancient riyal, which color was red, or the bill of 5 or 10 riyal which were no longer approved as exchange tool, then he intended to sell the 10 riyal with 100 riyal, then the ruling is alright. Because such ancient money has already became merchandise, and no longer a currency, thus there’s no problem in it. (Refer to: Liqa’at Bab Maftuh, 233/19).
And Allah knows best.
Answered by: Ustadz Ammi Nur Baits
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