Question
I BUY RAW MATERIAL REQUIRED FOR PRODUCTION ON CREDIT TERMS FOR SAY 90 DAYS IN A DIFFERENT CURRENCY FROM A DIFFERENT COUNTRY. BUT THE CURRENCY KEEPS FLUCTUATING OR ON MOST INSTANCES MY LOCAL CURRENCY KEEPS DEPRECIATING SO AS A RESULT WHEN THE TIME TO PAY COMES I HAVE TO PAY A HIGHER PRICE IN MY CURRENCY WHEREAS THE AGREED AMOUNT IS PAID IN THE TRANSACTED CURRENCY. PLEASE LET ME KNOW IF THIS IS ALLOWED. IF NOT HOW CAN WE DO THIS BUSINESS IN THE HALAL MANNER.
CLARIFICATION.
SUPPLIER AGREES TO A PRICE (EXAMPLE ONE US$ AT THE TIME OF TRANSACTION IS 105RUPEES AND AFTER SAY 90 DAYS WHEN I HAVE TO PAY ,THE US$ IS 108RUPEES. SO SAY THE PURCHASE PRICE IS US$1000 THE I AM SUPPOSED TO PAY 105,000 RUPEES BUT DUE TO THE DEPRECIATION OF THE CURRENCY I HAVE TO PAY 108,000RUPEES. BUT THE SUPPLIER GETS THE AGREED US$1000 IN FULL.
THE TRANSACTION TAKES PLACE THROUGH A BANK. WHEN THE TIME TO PAY I DEPOSIT MONEY IN MY BANK ACCOUNT AND ADVICE THE BANK TO REMIT THE FOREIGN SUPPLIER’S BANK ACCOUNT SO HE GETS THE AGREED AMOUNT.
HOPE THIS IS CLEAR.
Answer
Muhtaram / Muhtaramah
In the Name of Allāh, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāh wa-barakātuh.
We acknowledge your seeking Islamic advice regarding your affairs. May Allah Ta’ala accept your efforts and grant you the ability to continue seeking Islamic advice in all aspects of life. We also received your clarification regarding the query, and have based our answer on the clarification.
We understand from the query that the transaction is conducted in a currency different from the currency of your country, and the payment made is also in that same currency. Such a transaction is permissible in Shari’ah, as long as the amount is fixed and known at the time of sale. This will be analogous to conducting a transaction in the currency of your country. The fluctuation in the value of a currency will not have an effect on the permissibility of the sale.
The 108,000 rupees paid to the bank (explained in the clarification) is in lieu of the US$1000 the bank will remit to the foreign supplier. It will be regarded as a separate transaction of rupees for dollars and will have no relationship with your transaction with the foreign supplier.
The transaction will only be impermissible if you make an agreement with the foreign supplier that you will make the payment in rupees to the value of US$1000 on a specific date. We understand from the query that this is not the case.
And Allah knows best
Darul Iftaa
Madrasah Inaa’miyyah
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