The Practice of Currency Denomination Exchange Before Eid al-Fitr: Permissible or Not?

As Eid al-Fitr approaches, many members of the public exchange banknotes of 100,000 rupiah—ten notes totalling one million rupiah—for smaller denominations such as 5,000 or 10,000 rupiah notes. However, in practice, the value received is typically reduced. For example, one million rupiah in 100,000 rupiah denominations is exchanged for 950,000 rupiah in 5,000 or 10,000 rupiah denominations.

Regarding this practice, what is its legal status under Islamic teaching? KH Ahmad Sarwat Lc, writing on the Rumah Fiqih platform, explains that there is indeed some difference of opinion on this matter. The question is whether it is permissible to exchange one million rupiah in the form of ten 100,000 rupiah notes for smaller denominations such as 5,000 rupiah notes, even if the value received is only 950,000 rupiah.

Most contemporary Islamic scholars prohibit this practice, as it is considered equivalent to riba (usury). However, upon closer examination, there are also scholars who permit it. Each group naturally possesses their own evidence and arguments supporting their respective positions.

The View That Prohibits the Practice

The view prohibiting such transactions is based on a hadith of the Prophet Muhammad, peace be upon him, that forbids exchanging goods of the same type but with different values. In Islamic jurisprudence, such a transaction is termed a riba contract, specifically referred to as riba fadhl (usury of addition).