Money exchange and payment

A: Such a transaction is impermissible as it falls under exchanging a currency with another without mutual immediate receipt of both parties of the due amounts. It is recorded by Al-Bukhari that the Prophet (peace be upon him) said: The selling of gold for gold is Riba (usury) except if it is handed from hand to hand and equal in amount. Similarly, the selling of wheat for wheat is Riba except if it is handed from hand to hand and equal in amount. Likewise, the selling of barley for barley, is Riba except if it is from hand to hand and equal in amount, and dates for dates is usury except if it is from hand to hand and equal in amount. Thus, exchanging a currency with another without mutual immediate receipt of both parties due amounts is a usurious transaction a Muslim has to avoid. There is still another defect in such a transaction, i.e. it is a loan that incurred a profit. However, there is a Shar`y (Islamic legal) way out of such usurious transactions. That is, you should contract with the merchant (Part No. 13; Page No. 461) a mudarabah (speculative partnership, giving an amount of money to trade with in return for a share in the profit); you pay its capital and he manages it buying commodities you want to buy and selling them in your country while both of you share in profits as well as losses. The capital is yours, which you may receive there or he may deliver it to your family. May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.