Is Currency Carrying Trade Haram?
Question:
Assalamualykum,
Is it haram to participate in currency Cary trading? This link adequately describes what this type of trading is: http://www.investopedia.com/terms/c/currencycarrytrade.asp
Answer:
Assalamu Alaykum,
At the top of the webpage that you referred to, the following definition is given for Currency Carrying Trade:
“A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate.”
As it is clear from the above definition, the whole gain out of this transaction is heavily based on riba.
If the above definition is the correct definition of what you referred to as Currency Carrying Trade then it is clear that it is haram since it involves riba.
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Farhad Shafti
July 2014
Assalamualykum,
Is it haram to participate in currency Cary trading? This link adequately describes what this type of trading is: http://www.investopedia.com/terms/c/currencycarrytrade.asp
Answer:
Assalamu Alaykum,
At the top of the webpage that you referred to, the following definition is given for Currency Carrying Trade:
“A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate.”
As it is clear from the above definition, the whole gain out of this transaction is heavily based on riba.
If the above definition is the correct definition of what you referred to as Currency Carrying Trade then it is clear that it is haram since it involves riba.
--------
Farhad Shafti
July 2014
