(2-1) Registration of Murabaha Transaction at the exchange

(2-1) Registration of Murabaha Transaction at the exchange

Rate Prevailing On the Day of Purchase from the

exporter.

Question (1)

In the event of restricting the international Murabaha transaction to

be executed in Kuwaiti Dinar, the investment department would demand approval and acknowledgement letters from the agent and the buyer stating that the transaction shall be registered in Dinar at the rate prevailing on the day of purchase from the exporter. On other cases where the purchaser records are maintained in a currency other than the Dinar (e.g. Sterling), the purchaser would demand that the sale invoices be maintained in his own currency (Sterling) against the Kuwaiti Dinar . Is this permissible?

Answer :

From Shari'ah perspective, no objection to conduct Murabaha transaction in Dollar and then convert the Dollar to the Dinar at the exchange rate of the Dollar (and other currencies) prevailing on the day of purchase from the exporter.

Source:

Kuwait Finance House, Book of Fatwas in economic issues, part (1), and (2), Fatwa No. (158).

Question (2) :

On a given day I purchased Dollars at different rates, e.g. 300, 290 & 295. Under these circumstances, which of these rates shall I apply when dealing with a client ?

Answer :

It is essential to evaluate the currency in case of Murabaha sale on the day you purchase the goods because it is now your liability even if the actual payment is deferred to a later date.

With regard to identifying the price on that day, you should apply the rates used by the local banks in dealing in documentary credits with their clients. Your cost price of purchasing the currency for yourself is not a standard measure if it is at odds with the prevailing price.

Source:

Kuwait Finance House, Book of Fatwas in economic issues, part (1), and (2), Fatwa No. (160).

Question ( 3):

Should I consider the exchange rate prevailing on the day of goods purchase upon which Murabaha contract is concluded or the exchange rate on the day it has been sold to the client?

Answer :

Murabaha deals have to be effected based on the currency used for buying the goods upon which the Murabaha contract is concluded. The price has to be paid on the same currency or in Dinar which the purchaser attains by virtue of foreign exchange contract when settling the due price by the same currency.

Source:

Kuwait Finance House, Book of Fatwas in economic issues", part (1), and (2), Fatwa No. (172).

(2-2) Buying Currency from a Client during Payment to the exporter:

Question:

When a client approaches Kuwait Finance House hoping to deal with it on Murabaha, Kuwait Finance House buys Commodity from a seller abroad. After having possessed the goods, it would be resold to it . This client demands the Finance House to buy the foreign currency from it upon payment of the goods value by Kuwait Finance House to the seller. This occurs when the foreign currency rate is suitable to Kuwait Finance House relative to market rates at that time.

Is it permissible for Kuwait Finance House to exercise such practice?

Answer :

If the goods sale contract is independent from the currency purchase agreement with the client, and if both contracts are If the goods sale contract is independent from the currency purchase agreement with the client, and if both contracts are

Source:

Kuwait Finance House, Book of Fatwas in economic issues, part (1), and (2), Fatwa No. (84).

(3) Selling Price for the Client (Purchase Orderer)