Question:
If someone lends money in Lebanese lira, and at the time of the loan it was worth a certain amount in US dollars, but the currency later collapses — can the lender request repayment in Lebanese lira equal to the original dollar value?
Answer:
Bismillahir Rahmanir Rahim
In cases of economic collapse or severe devaluation, Islamic law addresses repayment of loans through principles that protect both justice and clarity while avoiding ribā (usury) and dispute.
Legal Basis: Loans Must Be Repaid in the Same Currency and Amount
In the classical framework of all four madhhabs, when a person lends a fixed amount of money in a specific currency — such as Lebanese lira — the obligation upon the borrower is to repay the same amount and the same currency, regardless of fluctuation in value.
This principle stems from the fiqh rule:
> “Al-qard yuwadda bi-mithlih” – “A loan must be repaid with its equal in kind.”
And in relation to monetary exchange, the Prophet ﷺ said:
“Gold for gold, silver for silver… equal for equal, hand to hand. If these types differ, then sell as you wish, so long as it is hand to hand.”
(Ṣaḥīḥ Muslim)
Thus, once repayment involves a different currency, such as demanding the current value in USD or gold, it becomes a ṣarf (currency exchange), and cannot be imposed unless it is done by mutual agreement at the time of repayment.
What If the Currency Loses Significant Value?
When the borrower repays in the same currency (lira), but due to currency collapse this amount is now worth a fraction of what it was, the question arises: can the lender adjust for the original purchasing power?
There are two approaches:
1. Majority View: Repay Same Nominal Amount Only
All four madhhabs uphold that the amount repaid must match the amount borrowed in type and number, regardless of market shifts. So if 1 million lira were lent, 1 million lira must be repaid.
This applies even if the value has dropped over time.
No adjustment to match dollar or gold value may be demanded unless explicitly agreed upon at the beginning.
2. Value-Based View (in Cases of Severe Collapse)
A minority view, notably attributed to Ibn Taymiyyah and some later Ḥanbalī jurists, allows for adjustment when:
The value has drastically fallen, to the point where repayment of the same nominal amount would be oppressive.
The judge or parties may mutually agree to base repayment on the value of the loan at the time it was issued, using a stable reference (like USD or gold).
This view is not the default, and cannot be enforced unless the borrower agrees. It is only applied when the harm is extreme, and the loss would lead to unjust enrichment or exploitation.
Applying to Your Case
You lent Lebanese lira, but at the time it was equivalent to a certain amount in USD. Now, due to economic collapse, the lira has lost most of its value. You are asking whether you can request repayment in lira based on the original dollar value.
Without prior agreement, a new deal can be made at the time of repayment to mutually convert the repayment to the equivalent USD or gold value, but this cannot be forced unless done through legal Sharia arbitration.
Wallahu aʿlam