Malaysia Islamic clerics forbid forex trading

KUALA LUMPUR – Agence France-Presse

An advertisement offering cash loans is seen on the streets of Kuala Lumpur January 16, 2012. REUTERS photo

Malaysia’s highest Islamic body has issued an edict forbidding foreign exchange trading by Muslim individuals, saying such speculation violates Islamic law.

The National Fatwa Council ruled forex trading by money changers or between banks was allowable but trading by individuals “creates confusion” among the faithful, according to a report issued on Feb. 16 by state news agency Bernama.

Council chairman Abdul Shukor Husin warned “there are many doubts about it (forex trading) and it involves individuals using the Internet, with uncertain outcomes,” Bernama reported.

“A study by the committee found that such trading involved currency speculation, which contradicts Islamic law,” he was quoted saying.

A council official confirmed the ruling to Agence France-Presse but gave no further details.

Islam lays out a strict code of ethics for business that forbids speculation and usury.

While Malaysia’s brand of Islam is more moderate than in much of the Muslim world, some 60 percent of its 28 million people are Muslim and remain subject to Islamic law in civil affairs.

In 2008, the National Fatwa Council banned yoga for Muslims, saying it could erode their faith.

That triggered an uproar from moderate Muslims, prompting then prime minister Abdullah Ahmad Badawi to wade in, saying Muslims could do yoga as long as it had no Hindu spiritual elements.