---
title: "What is Bay al-sarf (currency exchange)? | IslamicOpenFinance™"
description: "An exchange of money for money, of the same or a different currency, which must be settled on the spot."
url: https://islamicopenfinance.com/glossary/bay-al-sarf/
lang: en-GB
source: "IslamicOpenFinance"
---

[Glossary](https://islamicopenfinance.com/glossary/) / [Sale-based contracts](https://islamicopenfinance.com/glossary/#sales)

Sale-based contracts

# Bay al-sarf (currency exchange)

An exchange of money for money, of the same or a different currency, which must be settled on the spot.

Bay al-sarf is the exchange of money for money, whether of the same type or of different currencies, as Bank Negara Malaysia's glossary defines it. Because money is treated like the ribawi items gold and silver, the exchange is generally required to settle on the spot, and an exchange of the same currency must be at equal value. These rules shape how Islamic banks handle foreign exchange and why forward currency deals are structured differently.

## Sources

- [Bank Negara Malaysia, Shariah Contract Framework discussion paper, 2024: Glossary, Sarf](https://www.bnm.gov.my/documents/20124/938039/dp-shariah-contract-nov24.pdf)

This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.

## Related terms

[**Riba al-fadl** Riba of excess: an unequal exchange of the same kind of certain goods, such as gold for a larger quantity of gold.](https://islamicopenfinance.com/glossary/riba-al-fadl/) [**Islamic FX forward** A currency hedge built on a binding promise to exchange at an agreed rate on a future date, with the exchange itself done at spot.](https://islamicopenfinance.com/glossary/islamic-fx-forward/) [**Wa'd (promise)** A unilateral promise to do something in the future; it can be made binding and is used in hedging, sukuk and lease-to-own deals.](https://islamicopenfinance.com/glossary/wad/)

**Sale-based contracts**

1. [Murabaha](https://islamicopenfinance.com/glossary/murabaha/)
2. [Musawamah](https://islamicopenfinance.com/glossary/musawamah/)
3. [Bay al-muajjal (deferred-payment sale)](https://islamicopenfinance.com/glossary/bay-muajjal/)
4. [Salam](https://islamicopenfinance.com/glossary/salam/)
5. [Istisna](https://islamicopenfinance.com/glossary/istisna/)
6. [Tawarruq](https://islamicopenfinance.com/glossary/tawarruq/)
7. [Murabaha to the purchase orderer](https://islamicopenfinance.com/glossary/murabaha-purchase-orderer/)
8. [Hamish jiddiyyah (security deposit)](https://islamicopenfinance.com/glossary/hamish-jiddiyyah/)

[All 221 terms](https://islamicopenfinance.com/glossary/)