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Section: Questions   Category: Money Matters
TAGS:currency exchange  ribbis
Money Matters - Ribbis - Dollar Shekel Currency Exchange
Submitted by goldbaum  Answered by Rav Yehonoson Hool
Question:
Answer:

The halachos of Ribbis – the prohibition of paying interest – are numerous and complex, but we shall try to present a very brief summary with regard to the subject at hand.

In situations of inflation or deflation, the Halachah regards the currency as being stable and everything else as fluctuation. So if one borrows, for example, $100, one pays back $100, even if there was deflation in the interim and the $100 has more buying power than it did at the time of the loan. If, however one borrows anything other than currency, e.g. food, goods etc. there is a concern that in the interim there may be inflation, and the goods will increase in value, so that if one repaid the same amount of goods one would actually be paying interest. For example, if one borrowed a kilo of flour from a neighbour, and returned it a week later, and in the interim the price of flour increased, returning a kilo of flour would entail repaying the loan with something that is worth more than the original loan, which involves the prohibition of paying interest.

Therefore, in general Chazal prohibited lending anything other than currency, for fear that the value may increase before the repayment of the loan.

However, there are two leniencies built in to this prohibition. Firstly, if the price is stable, it is permitted, because there is no concern that the price will increase. Secondly, if the borrower has at least a small amount of the borrowed item, it is also permitted. For example, it would be permitted to borrow a kilo of flour if the borrower has at least some flour of his own at home.

What about different currencies? The consensus of opinion among the Poskim is that foreign currency that is not readily usable in the country where the loan is taking place is considered as goods rather than currency. So to borrow Canadian dollars in Israel would not be permitted unless the borrower owned at least one Canadian dollar of his own.

Now we approach the question in hand. What if the loan took place in the local currency, but the repayment takes place in a different country in the local currency of the place of repayment? For example, one lends shekels in Israel with the repayment in Canadian dollars in Canada.

There would appear to be a difference of opinion as to how to regard this loan.

Rav Yosef Gelber (Nesivos Sholom 162:1) is inclined to consider this as a loan of money, as this is the local currency at the time of the loan. As such, there would be no problem with the actual loan. When the time would come to repay the loan in Canada, one could either pay the same amount of shekels that was borrowed or alternatively, pay the amount in Canadian dollars at the exchange rate of the time of repayment.

(If you want to fix the repayment in Canadian dollars at the exchange rate which is valid at the time of the loan, in effect the "lender" is buying dollars, and it would only be permissible if the borrower in Canada has in his possession the entire value of the loan in Canadian dollars – Bris Yehudah 20:11.)

Rav Yaakov Blau, however, (Bris Yehudah 18 footnote 15) is inclined to view the loan as being a loan of goods rather than currency. Because the condition of the loan was that it be repaid in Canada, not Israel, he regards it as if the loan actually took place in Canada. And since the shekel is not a valid currency in Canada, such an arrangement would be prohibited unless the borrower had at least one shekel in his possession at the time of the loan.

Thus in our case, if your brother in Canada has at least one shekel in his possession, he can ask your mother to lend him shekels in Israel (by paying off any debts that he has there). If he doesn’t have any shekels, ask your mother to give someone a shekel to acquire it on his behalf. Once he now owns a shekel, the arrangement is permitted, as explained earlier. Again, the repayment in Canada would be in shekels, or in Canadian dollars at the exchange rate which is valid at the time of the repayment.

And again, if you want to fix the repayment in Canadian dollars at the exchange rate which is valid at the time of the loan, in effect the "lender" is buying dollars, and it would only be permissible if the borrower in Canada has in his possession the entire value of the loan in Canadian dollars.

posted:2009-01-27 00:25:33


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