[Avodah] Currency Trading and Ribis

[Micha Berger]

On Sun, Jan 25, 2009 at 7:25pm GMT, R Elazar M. Teitz wrote:
: The source to which the above is attributed seriously misquoted
: what my father wrote (which, incidentally, was in 1951, within a year
: of the introduction of Israel Bonds -- not 30 years ago).

That's because the blog cited was actually quoting
http://www.jlaw.com/Articles/ribis6.html , by R' Joseph Stern. I assume
the JLaw article is from 1981 or so.

...
: For a very large bond, the per capita amount might be more than a
: p'ruta, so his suggestion was to buy several smaller bonds rather than
: one large one. Each bond represents a separate loan, and for each
: individual loan, each borrower receives less than a p'ruta.

May we all be zokhim to be able to have to ask this she'eilah lemaaseh.

On Sun, Jan 25, 2009 at 10:47:47PM -0800, Harvey Benton wrote:
: What about currency trading? From my understanding,
: currencies can be sold as commodities, at a fixed payment now, for
: delivery in the future. Profit is not made in the form interest coupon
: payments but rather on the speculation (by both parties) as to the
: eventual price of the currency at the settlement date.  

First, if a three way transation through an exchange is mutar, then this
is a non-issue.

The aforementioned article also mentions that a broker (which si even
less than an exchange) may be enough lehatir -- even if the broker is
Jewish. At least, that's how the Mordechai understands the Rashi, and is
quoted by the Rama. There are other opinions on how to understand Rashi,
never mind the din.

The Minchas Yitchaq, based on Shu"T CS writes about the question of
whether one may repay a loan of 1 sheqel with today's equivalent, even
if it would now take 3 sheqels. RJS quotes and then translates:
     Only if currency has been taken out of circulation must the debtor
     pay with the new currency. If the currency has been devalued and
     certainly if no official devaluation has taken place but merely its
     purchasing power has decreased as a result of inflation, even if a
     specific indexing clause was inserted into the contract the debtor
     may pay according to the old exchange rate.

In terms of commodities, SA allows discounting for early payment
if there is no set market price. Which is shitas Tos'. See
<http://www.jlaw.com/Articles/ribis2.html> for how they reach that
conclusion.

The CI (YD 74:5) and the IM (YD 2:114) make a similar linkage between FX
and commodities tradiging. You borrow face value; inflation changes are
like change in sha'ar of a commodity. Linking a loan to an index is
therefore ribbis.

However, the Nemuqei Yoseif allows one to promise to pay in a foreign
currency. Thus, an Israeli loan priced in dollars is valid.

Tir'u baTov!
-Micha

-- 
Micha Berger             One doesn't learn mussar to be a tzaddik,
micha at aishdas.org        but to become a tzaddik.
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