The National Fatwa Council ruled forex trading by money changers or between banks was allowable but trading by individuals "creates confusion" among the faithful, according to a report issued Wednesday by state news agency Bernama.
Council chairman Abdul Shukor Husin warned "there are many doubts about it (forex trading) and it involves individuals using the Internet, with uncertain outcomes," Bernama reported.
"A study by the committee found that such trading involved currency speculation, which contradicts Islamic law," he was quoted saying.
A council official confirmed the ruling to AFP but gave no further details.
Islam lays out a strict code of ethics for business that forbids speculation and usury.
Some 60% of Malaysia's 28 million people are Muslim and remain subject to Islamic law in civil affairs.
In 2008, the National Fatwa Council banned yoga for Muslims, saying it could erode their faith.
That triggered an uproar from moderate Muslims, prompting then prime minister Abdullah Ahmad Badawi to wade in, saying Muslims could do yoga as long as it had no Hindu spiritual elements.
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Well guys.. making comments here is easy and some comments are ridiculous.. does any one of you ever had a short or long FX trade? try putting all your money against USD/EURO or YEN/EURO.. you will know the reason of this fatwa and basis why sharia laws cannot allow such kind a trading.
I am not a religious scholar so would not comment on this Fatwa. However it concerns practicing Muslims and is a guide line for ones who want to follow. Not sure why a big fuss about it by people who are either not Muslims or are not practicing Muslims. Generally speaking Islam has stricter guidelines when it comes to trading non commodity base products and money. But it is not just Islam, countries have their own checks, balances and laws that govern various financial transactions. Some more strict than others. Current economic situation caused by excessive interest based borrowing and speculative housing pricing hikes or Asian financial crisis of 1997 caused by currency exchange rates are examples of the consciences for not being careful and neglecting practices and rules in place when trading in non-commodity based products and transactions. I once wanted to trade form Canadian province of British Columbia and many trading companies do not accept clients from here due to restrictions in trading imposed by local provincial government. Same goes for housing market and other loan practices, they are very strict here. Some people whine about these local restrictions here, other favor them and consider them a reason for financial stability here and that Canada especially British Columbia didn’t get hit by similar crisis as in US. At least this Fatwa is not a law and one can ignore it, you cannot do that if you happen to disagree with Gov. of BC or Gov of Canada’s financial laws.
who cares this person .One of the reason for backwardness of Muslims
From the limited understanding I have of the issue, Islam does allow engaging in transactions that have element of uncertainty...that is why stock trading as well as forex trading is permissible...in fact financially, forex is one of the most predictable asset class...that is why it operates at near efficiency...it would have been better if they had published the details of their arguments...it seems they are equating forex trading with gambling...which is usually not the case from trader's viewpoint
As some people have learnt through experience i am talking about the recent financial crash which has left the world economy in dire straights because they speculate on thin air, Islam does not encourage such transactions because they have NO real value that's why the world is in this mess, Speculating on thin air does not work...
@ KhALID
what is disturbing u, if "muslims" dont want to adhere to islamic rules? This is exactly the reason why i think Pakistan is a big mistake, coz everyone is forced to adhter to islamic rules. Dont u know, not every Pakistani is a muslim nor does every Pakistani wants to adhere to islamic rules? So funny, Muslims in west are living and enjoying their rights and freedom more than all minorities in islamic countries together! PERIOD!
@ Acorn Guts, Islam has categorically said that profit on Trading is Halal, and profit (interest) on giving loan is Haram i.e. you cannot make profit on loaning out Rs 100 and get additional Rs 5 but you are allowed to sell a commodity worth Rs 100 to any value that u desire, the price is determined through demand and supply.
My argument is that he is disallowing Forex trading on leverage but allowing interest earned on certificates, this is Khula Tazad
Is selling petroleum a business?
Malaysia is an example to other muslim countries because it is trying its best to rule via Islamic Sharia Law. Its difficult to do so, especially in this modern age, where shaitaan has a hold over us. 1 thing I cannot stand is 'liberal' muslims who don't want to adhere to islamic rules
Hate to break this to them but any trading we do would then need to be banned if we go by their understanding of Islam. When you buy regular stock, you can only but speculate the profit outcomes over the uncertain time dimension. You don't know what will happen next, the stock may catch fire, people may lose interest in product and you'd make a loss, just like trading in currency. We live in a universe where uncertainty forms a corner-stone of everything. Islam prohibits gambling, there is an element of greed and opulence .. but we all know subtlety is a kufr when it comes to our clerics. I can only shake my head and laugh.
Doesnt make sense, as at one point he is disallowing Forex trading and other point allowing interest on Savings certificate.
Seems like Malaysian Mullah and Pakistan are of same type.
Makes sense. If the Quran says this, it says this. The liberal Muslims will come and say this is not Islam, but actually it is!
LOL. WE were reliably told that Malaysia is a modern and democratic Islamic country.
@Stupid Man: Try to understand the essence, wisdom, logic and proof behind the edict... and if you don't agree, post some viable, logical, counter arguments... People only resort to name calling when they can't do much else...
@Stupid Man: Wow Einstein, in case you were never taught, fiat money backed by nothing is fraud. Mullahs are right.
Why only foreign exchange. You can ban everything which is foreign or western comprising medicines, arms, vehicles, razors, cosmetics, airplanes, internet etc. leaving only dadi and bur-qua.
Stupid mullahs.....
"Islam lays out a strict code of ethics for business that forbids speculation and usury"
Everyone enters into business with the expectation of profit. Such expectation is a speculation. Accepting the anticipated loss is also speculation.
Banks and Forex agents also speculate in their transactions based on the supply and demand. Why the individual trader is any different.
I think these Islamic clerics have too much time on their hands. May be they should do Yoga to think properly.