I heard Abu Sa`id Al-Khudri saying, "The selling of a Dinar for a Dinar, and a Dirham for a Dirham (is permissible)." I said to him, "Ibn `Abbas does not say the same." Abu Sa`id replied, "I asked Ibn `Abbas whether he had heard it from the Prophet (ﷺ) s or seen it in the Holy Book. Ibn `Abbas replied, "I do not claim that, and you know Allah's Messenger (ﷺ) better than I, but Usama informed me that the Prophet had said, 'There is no Riba (in money exchange) except when it is not done from hand to hand (i.e. when there is delay in payment).' "
The Prohibition of Riba in Currency Exchange
This narration from Sahih al-Bukhari addresses the fundamental Islamic ruling on currency exchange, prohibiting any form of usury (riba) in monetary transactions.
Scholarly Commentary on the Hadith
The exchange of gold for gold or silver for silver must be equal in weight and handed over immediately in the same sitting. This is the condition of "mithlan bi-mithlin" (equal for equal) and "yadan bi-yadin" (hand to hand).
Ibn Abbas initially held a different opinion, but when questioned by Abu Sa'id, he clarified that his understanding came through Usama ibn Zayd from the Prophet himself, establishing that riba occurs only when there is delay in payment or inequality in exchange.
Legal Implications for Modern Trade
This hadith forms the basis for Islamic finance principles regarding currency exchange and spot transactions. Any delay in delivery or receipt in currency exchange constitutes riba al-nasi'ah (usury of delay).
Contemporary scholars apply these principles to modern banking and foreign exchange transactions, requiring immediate settlement to avoid prohibited riba.