Question
I lent someone some money. I paid $1000 Canadian Dollars through an app, and he received about 190,000 Pakistani Rupees. Now, he wants to pay me back and I’m in Pakistan, so he will pay me in Rupees. But the value in Rupees changed, and now it’s around 205,000 Rupees to $1000. My question is: does he pay the old value of the Rupees when I lent him, or the new value? And what if I wanted the money back in dollars, which is the currency I gave?
Answer
The ruling depends on the currency of the loan contract:
- If you lent him in Canadian Dollars (CAD):
- The debt is owed in CAD, since that was the currency of the loan.
- He must repay you the exact $1000 CAD (regardless of how many Rupees he received at the time).
- If you are in Pakistan and agree to take repayment in Rupees instead of CAD, then the repayment is calculated at the exchange rate on the day of repayment, not the old rate at the time of the loan. This prevents injustice to either party.
- If you agreed that the loan was in Rupees from the beginning:
- Then the amount owed is the exact 190,000 Rupees that he received at the time of borrowing.
- He is not responsible for currency fluctuation, because the contract was set in Rupees.
Important principle:
The Prophet ﷺ said: “The creditor is only entitled to his exact amount.” (Muslim, 1584)
AAOIFI Shariah Standards (No. 1, on Currency) also affirm that loans must be repaid in the same currency and same nominal amount. If repayment is made in another currency, the conversion must be done at the rate on the day of payment, not the historical rate.
Final Ruling:
- If the loan was in CAD, you must receive back $1000 CAD. If you take Rupees instead, it must be at the current exchange rate at repayment.
- If the loan was in PKR, then you are owed 190,000 PKR, regardless of fluctuation.
And Allah knows best.