Knowledge

How to Avoid Usury When Exchanging Currencies?

Question: Assalamu alaykum

I get paid at work in a foreign currency and I always have to convert my salary to our local currency. I am trying to ensure I am not engaged in usury so I am confused on what rate I should use for the conversion. Shall I use the rate I was paid in or shall I use the current rate that the bank is willing to change the currency for as at that day?

Answer: Wa alaikum as-salam wa rahmatullahi wa barakatuhu

Exchanging the currencies of different countries does not entail riba, and it is generally permissible at any rate agreed upon by the two parties. However, in some countries there is a government-mandated exchange rate. If this is the case in your country, you would be obligated to exchange at that rate. This is because one must obey the laws of one’s country in all matters that are not contrary to Shariah. For details, please read the article below.

Wassalam,
[Shaykh] Umer Mian

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