Shari'ah and Ethical Review of Investment in Unstable Currencies: A Research Study in the Context of the Iranian Rial

Abstract

This research paper provides an in-depth Shariah and ethical perspective on investment in volatile currencies with particular focus on the Iranian Rial. In a world of economic sanctions, geopolitical tensions and inflation, unstable currencies are a complex challenge for Muslim investors looking for halal investment opportunities. The research analyses the extent to which investment in highly unstable currencies such as the Iranian Rial is in accord with Islamic economic principles. It examines fundamental Shariah principles of Bay‘ al-Sarf (currency exchange), Riba (interest), Gharar (excessive uncertainty) and Qimar (gambling). It concludes that trading for speculation, leverage and margin trading, and holding currencies only for the expected price appreciation in the market of the Iranian Rial include elements of Gharar fahish and Qimar, making such investments prohibited. The research examines live economic data from 2025-2026 and the Iranian Rial's extreme volatility (1.3-1.6 million IRR per USD), inflation (68.9%), and high liquidity risks due to sanctions. From a moral standpoint, the study finds that exploiting a sanctioned and distressed economy is economic exploitation, contrary to the Islamic objectives (Maqasid al-Shari‘ah) of the preservation of wealth and avoiding injustice. It highlights Islamic brotherhood and justice, noting that these investments create divisions among Muslims. The paper concludes that investing in volatile currencies for speculative gains is prohibited by Shariah. It suggests Muslim investors engage in ethical and real economic activities such as productive businesses, gold, real estate, and Shariah-compliant financial instruments. The paper offers recommendations for individuals, Islamic financial institutions, and policymakers to encourage halal investment in volatile economic situations.

Keywords: Unstable Currencies, Iranian Rial, Shariah Analysis, Gharar, Riba, Islamic Finance, Ethical Investment, Sanctions, Speculation, Maqasid al-Shari‘ah.