Category: Riba, Loans and Working in Banks

Whoever borrows Money in one Currency, can he repay it with another Currency?

Question :

One of my relatives who lives in Cairo requested a loan amount of 2,000 dollars, which he sold and got 2,490 Egyptian pounds. Now he wants to repay the debt, while knowing that we did not agree on a set time for repayment and how the money should be repaid. The question is do I take from him 2,490 Egyptian pounds, which is equivalent now to 1,800 American dollars (which is less than the amount that I paid to him in dollars), or do I get 2,000 dollars? This is while knowing that he will have to buy the dollars for about 2,800 Egyptian pounds (which is 300 Egyptian pounds more than the amount he got).

Answer:

What is obligatory is that he returns to you what you lent him in dollars, because this was the loan that he took from you for himself. However, along with that, if you both agree that he give you Egyptian pounds, there is no harm in that. Ibn 'Umar said: "We used to sell camels at Al-Baqi' for dirhams and we would take dinars for them. Then, we would sell the dinars and take dirhams for them. So, the Prophet said:
There is no harm if you take them for their price on that day, as long as you (the two dealers) do not separate with something (owed) between you."

So, this is selling cash for another type of cash, which is similar to what selling gold for silver is. Thus, if he and you agree that he gives you Egyptian pounds instead of dollars, under the condition that you do not take from him more pounds than what the loan was equal to at the time of agreeing to the change (of currency), there is no harm in that. For example, if 2,000 dollars now equals 2,800 pounds, it is not permissible for you to take 3,000 pounds from him. But it is only permissible for you to take 2,800 pounds and it is permissible for you to take 2,000 dollars. This means that you take according to today's price or less, meaning you do not take more, because if you took more, you have taken profit in what was not included in that which you were guaranteed. Indeed the Prophet a prohibited any profit on that which was not guaranteed. However, if you took less, then this is taking some of your right and relinquishing the rest, and there is no harm in that.

Source:
Ash-Shaykh Ibn 'Uthaimin
Fatawa Islamiyah, Vol. 3 Pages 421-422