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Repaying loan in foreign currency
Suppose a person takes a loan in foreign currency say $1000 and promises to return it in one year. The person who is taking the loan lives in Pakistan and will of course have to pay it back in rupees.
At the time of repayment of debt will the currency rates of present day be used or the currency rates prevalent at the time the debt was taken.?
For example $ 1000 was equal to Rs 100,000 in 2014 and now its equal to 95,000. Which amount will have to be given?
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
In principle, when one takes a loan in any currency and intends to pay back the loan in another currency, the market rate at the time when the loan was taken must be considered.
And Allah Ta’āla Knows Best
(Mufti) Abdul Azeem bin Abdur Rahman
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