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Currency exchange, its Illah and implications

Oziev, Gapur and Mohammed, Mustafa Omar and Zaidon, Muhammad Hafizi and Amafua, Mahfuth Khamis (2016) Currency exchange, its Illah and implications. Journal of Islamic Finance, 5 (1). pp. 45-52. ISSN 2289-2109

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Abstract

Foreign exchange is among the most important transaction in any economy. It can affect positively or negatively the relative price of domestic and foreign goods, which in turn has effect on the country’s economic growth, employment rate, inflation and balance of payment, among others. Yet, foreign exchange has remained a contentious issue among Muslim jurists and scholars. There are those who approve spot transactions but regard forward transactions as unlawful. Conversely, some scholars and jurists do not see any problem with the forward transactions if they are used for hedging purposes. This contention does bring into fore a pertinent research need of revisiting, in the context of modern business environment, the Illah (effective cause/reason) for determining whether a given foreign exchange transaction is Shari’ah compliant. The present study has critically reviewed the major literature and fatwas issued in relation to foreign exchange. It has adopted content analysis to categorize these various views on the subject and preponderated the major ones relevant to modern business. The authors have concluded that the only possible illah to be considered for the modern paper money is Athummuniyah (means of payment). The study concludes with recommendations and suggestions for future research.

Item Type: Article (Journal)
Additional Information: 5936/48829
Uncontrolled Keywords: Currency Exchange, Illah, Implications
Subjects: B Philosophy. Psychology. Religion > BP Islam. Bahaism. Theosophy, etc > BP1 Islam > BP173.75 Islam and economics
Kulliyyahs/Centres/Divisions/Institutes: Kulliyyah of Economics and Management Sciences
Kulliyyah of Islamic Revealed Knowledge and Human Sciences > Department of General Studies
Depositing User: Dr. Mahfuth Amafua
Date Deposited: 24 Feb 2016 14:10
Last Modified: 24 May 2018 15:14
URI: http://irep.iium.edu.my/id/eprint/48829

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