Economy
Is Forex in Nigeria Halal or Haram? Case Study
The Muslim population in Nigeria is still expanding. According to estimates, 80–85 million Nigerians (approximately 50% of the population) identify as Muslims, many of whom are probably Sunnis (60 million). Any Nigerian citizen, regardless of religion, can trade forex using Nigerian brokers as long as they are using their own money. However, every individual has to follow their own religious laws to ensure they are trading within the guidelines.
In this article, we are going to try and answer the question, is forex in Nigeria Halal or Haram? Let’s jump right into it.
Forex Trading According to Islam
The mere exchange of currencies is legal as long as traders follow certain guidelines. Additionally, it is legal for Muslim traders to turn a profit when exchanging money. However, the forex market involves more than just exchanging currencies. It also entails making and carrying out various contracts when employing futures, options, interest trading, and other activities. Some people think that the fundamentals of forex trading are consistent with Islamic teachings, while others think they are in opposition to them.
Experts and academics disagree on whether trading in the forex market is halal (permissible) or haram (forbidden) in Islam. Islamic financial rules place a strong emphasis on avoiding interest (riba) and conducting morally and fairly. Under Islamic law, whether trading in foreign exchange is permitted in Nigeria or anywhere else depends on a number of variables, including the particular trading procedures and objectives. Let’s discuss some of the guidelines that determine how Muslim traders should conduct themselves in the market.
Regarding Interest (Riba)
Interest-based transactions are absolutely forbidden in Islamic finance. In traditional Forex trading, overnight-held positions (swap or rollover fees) may be subject to interest charges or earnings. This feature of forex trading can be in violation of Islamic teachings. Also, leveraged trading accounts constantly use an interest component which can render transactions Haram. But investors can utilize Islamic accounts that do not charge overnight fees. These accounts are tailor-made for Muslim traders to ensure they do not break religious laws when transacting.
Speculation and Gambling
Excessive speculation and actions that resemble gambling are discouraged in Islamic finance. Forex trading becomes unlawful if thought to include excessive speculation or is similar to gambling. To maximize the chances of profiting, investors employ a range of tactics to forecast market movement. They observe how the value of various currencies fluctuates without really owning, purchasing, or trading the currency they are speculating on. This raises concerns about whether trading in the foreign exchange market is legal or not.
In reality, the majority of traders are gambling rather than trading. You are gambling if you place trades before determining whether your approach or strategy is lucrative or if you risk real money before determining whether you are a consistently profitable trader. A trader is not gambling because they are aware that, despite occasional setbacks, they will ultimately turn a profit. As long as Muslim traders do not gamble in the process of trading, their activities are within religious guidelines.
Ethical Business Conduct
Islamic finance promotes transactions that are both financially beneficial and have a positive social impact, stressing honest and ethical business practices. If a trader engaged in dishonest or unethical tactics when trading, then they are in violation of Islamic principles. Making money through trading is acceptable in Islam as long as it is done in conformity with Islamic law. Interest charging, referred to as usury, or riba, is exploitative and unfair according to Islamic laws. Muslim traders must conduct themselves ethically, otherwise, their activities would be considered Haram.
What is an Islamic account?
These days, a lot of brokers provide accounts for Islamic forex traders. An Islamic account is a swap-free account that doesn’t charge Muslim traders any overnight fees or swaps. Additionally, they guarantee that financial transactions are completed as quickly as possible. These accounts are made for Muslim investors who want to trade currencies without breaking Islamic laws against interest and excessive uncertainty. An Islamic account also permits keeping positions open for an unlimited period of time, which is consistent with the Islamic concept of avoiding unnecessary uncertainty.
Closing Remarks
Given the factors discussed, some academics and professionals in the Islamic financial sector think that certain types of Forex trading can be regarded as halal if they follow Islamic norms. For instance, some contend that spot Forex trading that doesn’t involve overnight positions (swaps) may be more consistent with Islamic values. For the most part, it seems that forex trading is Halal as long as a Muslim trader uses an Islamic account.
It’s crucial to remember that there isn’t a single, widely accepted position on this matter, and interpretations can differ. Individuals interested in Forex trading in Nigeria should consult certified Islamic scholars or financial specialists who are knowledgeable about both Forex trading practices and Islamic finance principles in order to make an informed conclusion. They can offer advice based on your unique circumstances and trading methods to establish whether a given Forex trading strategy is permitted or prohibited by Islamic law.
By Adedapo Adesanya
The duo of Geo-Fluids Plc and Afriland Properties Plc propelled the NASD Over-the-Counter (OTC) Securities Exchange up 0.13 per cent on Friday, January 10.
Investors gained N1.4 billion during the trading session after the market capitalisation of the bourse ended at N1.053 trillion compared with the previous day’s N1.052 trillion, and the NASD Unlisted Security Index (NSI) increased at the close of business by 4.07 points to wrap the session at 3,073.93 points compared with 3,069.86 points recorded at the previous session.
Geo-Fluids added 25 Kobo to its value to close at N4.85 per unit compared with the previous session’s N4.60 per unit, and Afriland Properties Plc gained 24 Kobo to close at N16.25 per share versus Thursday’s closing price of N16.01 per share.
There was a 35.4 per cent fall in the volume of securities traded in the session as investors exchanged 4.3 million units compared to 6.6 million units traded in the preceding session, the value of shares traded yesterday went down by 37.4 per cent to N17.2 million from the N27.5 million recorded a day earlier, and the number of deals decreased by 47.2 per cent to 19 deals from the 36 deals recorded in the preceding day.
FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 1.9 million units worth N74.2 million, followed by 11 Plc with 12,963 units valued at N3.2 million, and Industrial and General Insurance (IGI )Plc with 10.7 million units sold for N2.1 million.
IGI Plc closed the day as the most active stock by volume (year-to-date) with 10.6 million units sold for N2.1 million, trailed by FrieslandCampina Wamco Nigeria Plc with 1.9 million units valued at N74.2 million, and Acorn Petroleum Plc with 1.2 million units worth N1.9 million.
By Adedapo Adesanya
The Naira witnessed a depreciation on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, January 10.
According to data from the FMDQ Exchange, the local currency weakened against the greenback yesterday by 0.12 per cent or N1.80 to sell for N1,543.03/$1 compared with the preceding day’s N1,541.23/$1.
The pressure on the domestic currency came as the access granted to the Bureaux de Change (BDC) operators by the Central Bank of Nigeria (CBN) to purchase FX from the official market through the Electronic Foreign Exchange Matching System (EFEMS) platform prepares to end next week, precisely on January 19.
The CBN had given a 42-day window to the operators to access the platform to help stabilise the Naira in December, and this expires next week.
On Friday, the Nigerian currency tumbled against the Pound Sterling in the official market by N30.78 to sell for N1,889.29/£1 compared with the previous day’s N1,858.51/£1, but gained N5.48 against the Euro to finish at N1,583.81/€1, in contrast to Thursday’s rate of N1,589.29/€1.
As for the parallel market, the Nigerian Naira remained stable against the US Dollar during the trading session at N1,650/$1, according to data obtained by Business Post.
In the cryptocurrency market, it was bearish as the US economy added 256,000 jobs last month, the Bureau of Labor Statistics reported on Friday, topping forecasts for 160,000 and up from 212,000 in November (revised from an originally reported 227,000).
However, the readings came after a number of recent economic reports triggered a broad-market pullback across asset classes such as crypto as investors quickly scaled back the idea of a continued series of Federal Reserve rate cuts in 2025.
Cardano (ADA) fell by 3.6 per cent to trade at $0.921, Solana (SOL) slumped by 2.8 per cent to $185.93, Ethereum (ETH) depreciated by 1.4 per cent to $3,233.27, Litecoin (LTC) lost 1.3 per cent to finish at $103.62, Dogecoin (DOGE) shed 0.5 per cent to sell at $0.3315, Bitcoin (BTC), waned by 0.2 per cent to $94,154.43, and Binance Coin (BNB) went south by 0.1 per cent to $693.30.
On the flip side, Ripple (XRP) jumped by 1.5 per cent to settle at $2.34, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) sold flat at $1.00 each.
By Dipo Olowookere
Profit-takers took control of Customs Street on Friday, plunging it by 0.08 per cent at the close of trading activities.
The sell-offs were across all the key sectors of the Nigerian Exchange (NGX) Limited on last trading session of the week.
The insurance space went down by 1.53 per cent, the banking index depreciated by 0.41 per cent, the consumer goods sector weakened by 0.16 per cent, and the energy counter slumped by 0.08 per cent, while the industrial goods sector closed flat.
At the close of business, the All-Share Index (ASI) tumbled by 79.68 points to 105,451.06 points from 105,530.74 points and the market capitalisation retreated by N48 billion to N64.303 trillion from N64.351 trillion.
Yesterday, investors traded 1.5 billion shares worth N19.4 billion in 12,877 deals compared with the 489.5 million shares worth N13.1 billion transacted in 13,010 deals in the preceding day, indicating a decline in the number of deals by 1.02 deals and a rise in the trading volume and value by 203.14 per cent and 48.09 per cent, respectively.
Wema Bank was the busiest stock with 976.2 million units valued at N9.8 billion, Tantalizers traded 53.0 million units worth 129.6 million, Universal Insurance sold 34.8 million units for N26.8 million, Access Holdings exchanged 33.9 million units valued at N843.8 million, and Nigerian Breweries traded 27.3 million units worth N873.3 million.
The heaviest loss was suffered by Sunu Assurances with a decline of 9.99 per cent to trade at N7.30, Eunisell shed 9.96 per cent to N17.35, SAHCO crumbled by 9.87 per cent to N30.15, DAAR Communications plunged by 9.28 per cent to 88 Kobo, and Sovereign Trust Insurance went down by 7.04 per cent to N1.32.
On the flip side, C&I Leasing gained 10.00 per cent to close at N4.51, Honeywell Flour appreciated by 9.99 per cent to N10.02, Trans Nationwide Express jumped by 9.89 per cent to N2.00, RT Briscoe rose by 9.83 per cent to N2.57, and Secure Electronic Technology grew by 9.46 per cent to 81 Kobo.
Business Post reports that the bourse ended with 33 price gainers and 25 price losers, indicating a positive market breadth index and strong investor sentiment.
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