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Paying Debt In Islam In Other Currency

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Paying debt in Islam with different currency, is it permittable? How does Islam see the paying of debt with other currency? Say there is a man who borrowed a $100 from his friend. After some years then he was willing to pay his debt. But, he wanted to pay it in Indonesian Rupiah. He paid $100 in Rupiahs based on the exchange rate when he borrowed. In the other hand, his friend didn't accept it. He wanted his friend to pay with current exchange rate. What has the Quran say about it?


The answer


wa'alaikumussalam warahmatullah.

Before answering, we will remind you about the rules:

كلُّ قَرْضٍ جَرَّ نفْعًا فَهُوَ رِبَا

Every loan that generates benefits is usury. [Zawa'id Al-Haitsami No. 437, Sunan Al-Baihaqi Al-Kubra No. 10715]

In the above case, two things happened to them, namely:
1. Accounts Payable
2. Exchange rates

"Mr. A borrowed money from Mr. B in the amount of $ 100. Due to one reason or another, it has not been returned for many years. Then, now Mr. A intends to pay Mr. B in Rupiah, which value is calculated based on the exchange rate when Mr. A borrowed the money."

Our opinion :
There an error occurs, because this case is a pure debt, not a sale and purchase.
For example, the contract above is a sale and purchase, then repayment using another currency must be immediately at the location without any time lag.

So condition Mr. A in the quote above is wrong.
He is obliged to pay the debt in accordance with the dollar exchange rate that he borrowed, because the debt has passed and the exchange rate has been delayed.

Rasulullah peace be upon him said:
There is no prohibition for you to take it at the exchange rate on that day as long as you are not separated and something is in between you. [HR. Abu Dawud no. 3354]

"The dollar exchange rate when Mr. A borrowed is lower than it is today.
B does not want to accept payment of Mr. A's debt.
Mr. B asks Mr. A to return the money at the current exchange rate.
Meanwhile, Mr. A insisted on paying his debt at the current exchange rate. "

As explained above, that Mr. A is obliged to pay back the debt in the form of $ 100 whoever he is able to pay.

When Mr. B does not want to receive a payment other than $ 100, that is his right.
Mr. B erroneously asked Mr. A to return the current exchange rate. For the quotation of part 2, we consider Mr. A and Mr. B to be in error because they question the exchange rate of the debt. Even though debt should still be worth $ 100 at any time.

Al-Lajnah Ad-Daa-imah Lil Buhuuts Al-Ilmiyah Wal Ifta
Fatwa No. 8924

Question no. 1
Is it permissible to pay off debts in other currencies after an agreement between the two parties? For example, a person borrows a number of riyals that must be paid in a number of dinars after both monitoring the exchange rate of each money.

If the existing reality requires things like those mentioned above, then it is haraam to do because he is exchanging the currency in the future.
Meanwhile, what is allowed is if it is done immediately at the contract venue. Wabillaahit Taufiq. And may Allah always bestow prosperity and safety to the Prophet Muhammad sallallaahu 'alaihi wa sallam, his family and friends.

Question no. 19785
I once borrowed 20,000 Pakistani rupees from my brother. This amount at that time was equal to 7,000 Saudi riyals, for example.
Now I intend to return the funds to him and the 20,000 Pakistani rupees currently equals 2,000 Saudi riyals. Do I return the funds in Saudi riyals (2,000 riyals) or do I have to return the funds to him in the amount of 7,000 riyals according to the exchange rate at the time of borrowing, or do I have to return them in Pakistani rupees as when I borrowed from him?

You must return the funds that you borrowed from your relative in the same currency as when you borrowed, whether the exchange rate increases or decreases compared to the exchange rates of other currencies. Thus, you must return the 20,000 Pakistani rupees to him that you borrowed from him without making any additions or deductions.

Diah Dwi Arti
Diah Dwi Arti
Muslimah | Madiun, Indonesia | Mom of three | email: diah.d.arti [at]

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