Fiqhi (Jurisprudential) Review of Currency Swap and Assessing the Possibility of using it in Islamic Markets

In recent decades, currency swap has been introduced as one of the efficient tools to cover the risk of assets in currency in Islamic financial markets. Using the method of legal-deductive study, the present paper investigates the legitimacy of this financial tool. The research findings indicate that the main legal problem of this tool is the interest which parties pay mutually. This paper introduces two different approaches for solving this problem. The first approach necessitates interpreting and justifying this contract as a usury-free contract like the "contract of promise". The second approach requires drawing a new contract as an Islamic swap contract by using such contracts as contract of promise, tawarruq contract* and the method of currency options contract. The review of proposed methods for issuing Islamic swap indicates that the method of contract of promise in superior to tawarruq contract.