The third Source of crisis: Currency Trading
Allah the Exalted have created mankind with together with their weaknesses. It is impossible for anyone to be absolutely independent, thus he or she is able to fulfill all of his or her own needs. To fulfill the necessities, we often need other people.
Mankind uses money as an interaction tool, exchanging benefits, and valuing other people’s use. And the most appropriate substances to play this role are gold and silver. Gold and silver are valuable goods with an eternal economical values and this fact is agreed by all people. Gold economical value is not determined by market’s trust of other factor. The value is determined by the gold itself, because it is a good that has been agreed by all people as valuable good.
Since the main goal of money making is to serve as a standard for values of goods and services, Islamic law has been very strict with the currency exchange process (1).
The messenger of Allah -peace and prayer of Allah be upon him- said:
“Do not sell gold for gold but the similar ones, and do not add one side thus it’s amount is more than another side. Do not sell silver for silver but the similar ones, and do not add one side thus it’s amount is more than another side. And do not sell things in cash by (to be exchanged with -translator) the non cash things.” (Narrated by Al Bukhari and Muslim).
Ibn Rusyud Al Maliki said: “The problem of currency exchange is the most complicated of usury problem. The effect is that people who work in currency exchange business will be difficult to escape from usury. People who are able to be safe from it are those who are truly pious and knowledgeable of the lawful and unlawful in currency exchange. And it is known that their number are small. It is not strange that in the past time, Al Hasan (Al Bashri) said: ‘If you asked for a drink, and you are brought a drink from the house of currency trader, do not drink it. Previously Al Ashbagh refused to stand in the shade of the tent of the currency trader. Ibn Habib explained about the reason for Al Asbagh’s deed: Because most of them are falling into usury.” (2)
The people of today are tasting the bitter and the Terrible destructions afflicted upon them due to currency exchange. They are loosing the gold standard for the values of their goods and services. They trade the currency and leave the values to the market law or trust, just as the other traded commodities. If the demand of a currency increased, it’s exchange value will be increased as well, and if the demand decreased, so as the value.
Some of the forex trader speculates through a short sell method, that is by buying a currency in certain amount, and by debt. This kind of transaction usually lasts only for a day, thus in the afternoon, the buyer should sell the currency back to first seller (broker).
For example: Suppose that in the opening session at the morning, the exchange rate of Rupiah (IDR) to US dollar (USD) is $US 1= Rp. 10.000. A forex trader named Mr. Ahmad bought some rupiahs, for example, about IDR 150 billions from a broker with the price of $US 15.000.000 (fifteen million USD), and during the morning session Mr. Ahmad did not pay anything from his dollar to the broker, and the broker did not give the rupiahs of Mr. Ahmad as well. At the afternoon, in the closing session, if the exchange rate of rupiah got stronger, that is $US 1= 9.990,- , Mr. Ahmad would get money from the broker about IDR 10 x 15.000.000 = IDR 150.000.000,- (one hundred million rupiahs) as the profit.
In contrast, if at the afternoon session the exchange rate of rupiah got weaker, to $US 1= IDR 10.010,-, Mr. Ahmad should pay IDR 150.000.000,- to the broker, as the loss he suffered.
These practices are commonly found at the forex markets, and these practices destroy the exchanged values of traded currencies. Moreover, if it is done intentionally, and with a bad intention.
The messenger of Allah – peace and prayer of Allah be upon him- said:
“Indeed, on the Hereafter the merchants will be resurrected as the wicked ones but the pious merchant, perform righteous deeds, and honest. “ (Narrated by At Tirmidhi, Ibn Hibban, Al Hakim, and classed sahih by Al Albani).
That is what happened at the forex trading, and some cruel parties intentionally try to crush other country’s currency rate, in various ways.
A real example is the current condition, when the economic crisis strikes the USA, the US government does not want to suffer it alone; thus the government instructs all of the US citizens -particularly the US companies that investing their capitals abroad- to withdraw the capitals (3). The impact of this policy is the soaring rate of USD at the world forex markets, while the other currencies are failing.
A non cash forex trading as stated in the example above is clearly contradicting the previously mentioned hadith, and is a form of usury (riba nasi’ah).
It is understandable then that the government of Indonesia strictly ban the short sell model for forex trading, to maintain the stability of rupiah’s exchange value.
In this occasion, I (the author) think I need to praise the brilliant proposal offered by Prof. Dr. Mahatir Muhammad (ex-prime minister of Malaysia) to OKI, that is for the OKI members to get back using dinars as their currencies. By using dinar as currency, Islamic countries will be easier to maintain the stability of it’s exchange rate, and restrict the moves of the speculators, particularly the wicked ones. The exchange rate of dinar can not be manipulated by the wicked speculators since manipulating it’s value means to destroy the price of gold across the world. And if the gold itself is no longer valuable, all the other things will be valueless either.
Brother, what is happening to world’s economy of today is no other than the realization of Allah the Exalted’s decree, which can be translated as,
“Allah deprives interest of all blessing, whereas He blesses charity with growth.” (QS Al Baqarah/The Cow: 276)
And the saying of Allah’s messenger -peace and prayer of Allah be upon him-:
“Indeed the usury, although it is plenty in number, will eventually be scant.” Narrated by Imam Ahmad, At Thabrani, Al Hakim, and classed hasan (good) by Ibn Hajar and Al Albani.
Hence, the only solution to save mankind from this global economic crisis is by applying the Islamic law (sharia) thoroughly. By applying sharia in all aspects of life, for example in economy; the justice, prosperity, and stability in all of it’s aspects will be achieved. Because sharia is the only one that truly realizes the justice and truth in all aspects of life.
“Allah has promised those of you who believe and do righteous deeds that He will surely bestow power on them in the land even as He bestowed power on those that preceded them, and that He will firmly establish their religion which He has been pleased to choose for them, and He will replace with security the state of fear that they are in. Let them serve Me and associate none with Me in My Divinity. Whoso thereafter engages in unbelief, such indeed are the ungodly.” (QS An Nuur/ The Light: 55)
The Fourth Source of Crisis: Application of the cursed ideology of Qarun
The grandeur of the west that has been the mecca of the world economy of today reminds us the icon of economy in the ancient time. His figure – according to many people- was truly phenomenal and legendary, thus his name is still used until now. He is Qarun.
“To be sure, Qarun (Korah) was one of Moses’ people; then he transgressed against them. We had bestowed on him such treasure that their very keys would have been raised with difficulty by a whole group of strong people.” (QS Al Qashash/The Stories: 76).
Qarun was an icon of a successful businessman, smart, and wealthy. Thus, most of the people dreamt to be successful and wealthy as him. Perhaps- even some of us still wish to get even a small part of his riches.
” Once Korah went forth among his people in full glitter. Those seeking the life of this world said: “Would that we had the like of what Korah has! He truly has a great fortune.” (QS Al Qashash/The Stories: 79).
Qarun believed that he was successful in his business due to his own greatness and brilliance. Thus, when people admonished him and said to him:
“Seek by means of the wealth that Allah has granted you the Abode of the Hereafter, but forget not your share in this world and do good as Allah has been good to you and do not strive to create mischief in the land, for Allah loves not those who create mischief.” (QS Al Qashash/The Stories: 77).
The very similar thing occurred to the greatness and success of the west world. Some of us think that the west are successful in every aspects of their life, due to their intelligence, experience, and persistency. They become advanced countries due to the secular ideology they have adapted; separating between worldly life and various teaching of religions.
No wonder if some of the Muslims are calling the Islamic countries to copy all things derived from the western countries. We often dream and strive to be an advanced country as the westerns, and follow their footsteps. Among the real form of this copycat attitude in the muslim society is the readiness of some of the activists to change various principles, indications, and Islamic laws to be in accordance with theories of the westerns. This is only to realize their dream to be an advanced country just as the western countries.
If we’d like to be honest to ourselves, even just a bit, we’ll realize that our dream is just the same with the dream of people at Qarun’s time. We consider that success, riches, and advancement will be achieved by advanced education, hard working, and an excellent system.
We’ve been negligent, and even some of our economic experts do not believe that sustenance and all joys of the world are bounties and amenities from Allah alone. Some of us even trying to neglect that Allah the Exalted is the only One Who bestow and control every affairs of His creations?!
Brother, think about the decree of Allah the Exalted in a hadith qudsy below:
“O My slaves, all of you are astray except those whom I guide, so ask Me for guidance, and I will guide you. O My slaves, all of you are hungry except those whom I feed, so ask Me for food and I will feed you. O My slaves, all of you are naked except those whom I clothe, so ask Me for clothing and I will clothe you.” Narrated by Muslim.
“Indeed, Allah the Exalted is The One Who determine prices (i.e creating every thing that affecting prices -ed.), Who confine and expand sustenances, and The Bestower of sustenance.” Narrated by Abu Dawud, Ibn Maja, and classed sahih by Al Albani.
That is Qarun, the pioneer of this ideology, who, by his overwhelming riches, believed that he had achieved greatness and advancement. But out of blue, at that very time, Allah the Exalted lashed His wrath and chastisement:
“At last We caused the earth to swallow him and his house. Thereafter there was no group of people that could come to his aid against Allah; nor was he able to come to his own aid.” (QS Al Qashash /The Stories: 81). It was a real proof of the saying of the messenger of Allah – peace and prayer of Allah be upon him-:
“Indeed, Allah the Exalted postpone the oppressor, thus when the time comes for Him to afflict upon him the chastisement, he will not be able to escape.” Then the Messenger of Allah -peace and prayer of Allah be upon him- read the decree of Allah: “Such is the seizing of your Lord that when He does seize the towns immersed in wrong-doing, His seizing is painful, terrible.” (QS Hud: 102)” (Muttafaqun ‘alayh)
Brother, do you know what did the people say -those who wished to have riches and success as Qarun’s- when they witnessed the torments that afflicted upon their idol? They suddenly admitted that the intelligence, perseverance, and greatness of Qarun weren’t useful. Sustenance, happiness, salvation, and suffering are all parts of Allah’s will that occur upon His creations. Thus they said:
“And those who had envied his position the day before began to say on the morrow: “Alas, we had forgotten that it is Allah Who increases the provision of those of His servants whom He will and grants in sparing measure to those whom He will. But for Allah’s favour upon us, He could have made us to be swallowed too. Alas, we had forgotten that the unbelievers do not prosper.” (QS Al Qashash/The Stories:82)
Brother, compare their saying above to our condition these days. We all admit that not all that exist and applied in the western countries are valid to be imitated. Maybe now- although unwillingly- some of the economic experts admit that the various concepts and economic theories that they’ve learned from the heirs of Qarun could not save and prospering the world. In various mass medias we’ll find numerous analysis detailing mistakes and rotten parts of economic concepts adapted by the western world.
Brother, isn’t this global economic crisis enough to be a warning for all of us to get back to the Laws of Allah?! Don’t we all realize and believe that the universe and it’s contents are creations of Allah?! But why don’t we obey and apply the rules and regulations that Allah have sent to us to make the world prosper ?!
Isn’t it if we bought a machine from a company, we’ll certainly obey operational and maintenance guidance that the company has set before?! But why is it, that we deviate from this habit, when we wanted to use and maintain the world that is the creation of Allah?!
Brother! Read this promise of Allah the Exalted below:
“And when they reach the end of their term (of waiting), then either honourably retain them (in the bond of wedlock) or honourably part with them, and call two persons of known probity as witnesses from among yourselves, and (let these witnesses) give upright testimony for the sake of Allah.That is to what all those that believe in Allah and the Last Day are exhorted. Allah will find a way out for him who fears Allah, and will provide him sustenance from whence he never even imagined. Whoever puts his trust in Allah, He shall suffice him. Surely Allah brings about what He decrees; Allah has set a measure for everything.” (QS Ath Tholaq/The Divorce: 2-3)
In another verse, Allah the Exalted decreed:
“Those that you worship instead of Allah are merely idols, and you are simply inventing lies (about them). Indeed those whom you worship beside Allah have no power to provide you with any sustenance. So seek your sustenance from Allah and serve only Him and give thanks to Him alone. It is to Him that you will be sent back.” (QS Al Ankabut/The Spider: 17)
The promises of Allah the Exalted in both verses do not automatically mean that if we have performed prayer, fast, and recited remembrances suddenly gold and silver will be poured upon us, no. But these verses were interpreted by the Messenger of Allah -peace and prayer of Allah be upon him- in his saying:
“If you were to rely upon Allâh with the reliance He is due, you would be given provision like the birds: They go out hungry in the morning and come back with full bellies in the evening.” Narrated by Ahmad, and others.
That is the true application of these verses, that the Muslims must work hard, striving and never give up. The picture of a self-resignation of the Muslims is as a hardworking bird. Every morning each bird leaves it’s nest heading to various directions, to find sustenance, and at the afternoon, each of it comes back to it’s nest feeling full.
How beautiful a soul of a muslim is, if he brings this verse and hadith into life. He works hard, persistence, and at the same time, he faithfully believe that his sustenance is in the Hand of Allah. Each of his work will be followed by faith, prayer, and self-resignation. His slogan is the saying of the Messenger of Allah-peace and prayer of Allah be upon him- :
“O people, fear Allâh and be moderate in seeking a living, for no soul will die until it has received all its provision, even if it is slow in coming. So fear Allâh and be moderate in seeking provision; take that which is permissible and leave that which is forbidden.” Narrated by Ibn Maja, Abdurrazzaq, Ibn Hibban, and Al Hakim, and classed sahih by Al Albani).
The beauty of a believer’s soul will be more completed, when he get a bounty from Allah, that is a lawful sustenance. That is because he will immediately be grateful for the bounty, and by his gratefulness, the joys and graces that Allah have bestowed upon him will be increased and overwhelmed.
“Also call to mind when your Lord proclaimed: If you give thanks, I will certainly grant you more; but if you are ungrateful for My favours, My chastisement is terrible.” (QS Ibrahim/Abraham: 7)
Not only being grateful, but also as a faithful believer in Allah the Exalted and the Last Day, he will certainly spend the sustenance in rightful and full of goodness ways. Goodness for himself, his family, his society, and his religion.
“The best of lawful property is the lawful property of a pious man.” Narrated by Ahmad, and classed sahih by Al Albani.
Hopefully, this brief article can increase our faith and piety, thus we will not be stung many times from a hole.
“O Allah, Lord of Gabriel, Michael, Israfil, One Who has Created the skies and the earth, Who Know the unseen and seen things, You are the Judge among Your creations upon all of their conflicts. Guide us -by Your permission- to the truth in every conflicted matter, verily, You are The One Who guide whom You wish to the straight path. Prayer and peace of Allah might always be upon our Prophet Muhammad, his family, and all of his companions. And Allah is The One Who Know better of the truth. And the end of our prayer is: “All praises be to Allah, Lord of the Universe.”
1). The bad impacts and risks of currency trading a.k.a forex trading is larger than it’s benefits. The economic crisis that struck our country several years ago, which impact still lasts until now, also the global economic crisis we suffer today is the real proof of what I’ve elaborated here.
2). Al Muqaddimat Al Mumahhidaat by Ibnu Ar Rusyud Al Maliky 2/14.
3). Of course the companies invested their money in the form of USD, and withdrew it also in USD. Thus the exchange rate of USD still strong although it’s own country is under the economic crisis.
Author: Ustadz Dr. Muhammad Arifin Badri, M.A.
Article of www.syaria.com