When trading forex, if you leave a position open overnight, then depending on the interest rates of the currency pair being traded, you’ll either accrue or pay interest known as the swap. In Sharia law, interest is called riba and is forbidden. This means that Muslims who want to trade forex with a regular forex broker run into some real moral dilemmas, torn between trading profitably and their faith.
This is because unlike the financial systems that govern most of today’s developed economies where the end-game is to profit, Islamic finance take a more ethical approach. In Islam, interest is seen as unethical because it only rewards the lender, while the borrower incurs all risk.
Social and economic activity according to Islam, should promote happiness just like anything else in this life. Responsible lending without interest is just one aspect of this.