Abstract

The study aims to discuss the contract of forward exchange of money in Islamic Jurisprudence, where the general concept of exchange has been elaborated as well as the evidences of its legitimacy from Qur’an, Sunnah, Ijam (consensus) and Ma’aqul (rational justification). In addition, the study also deals with the contemporary economic concept of exchange. The banknotes has also been discussed with regards to its definition, Islamic ruling of conducting exchange contract in them particularly forward exchange. The methodology used were inductive and descriptive methods; the first one has been used to induce the most important issues related to forward exchange contract; while the later has been used to clarify the most significant Shari’ah rules and controls with regards to exchange and banknotes. The study finally concluded that exchange contract in general is permissible provided its rules and regulations such as receiving and equilibrium will be observed. The banknotes are similar to gold and silver, therefore, all the rules being applied to gold and silver should be applied on banknotes including prohibition of stream, paying Zakat and the permissibility of exchange contract with the exception of forward exchange contract on banknotes which is prohibited by Shari'ah.