Dayanim Shlita Strongly Oppose Investing in Foreign Currency Opportunities

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A standard beis din case before the Eida Chareidis this week dealing with a borrower and lender resulted in some interesting statements.

The borrower was brought to the beis din appearing before HaGaon HaRav Sternbuch Shlita and HaGaon HaRav Yurvitz Shlita. It was explained that a sum of NIS 100,000 was borrowed from a gemach, the plaintiff in this case. The borrower quickly invested his sum in a foreign currency venture, losing it all. When asked to pay back the loan, he explained he simply does not have the money.

The Dayanim Shlita explained it is simply forbidden to encourage such opportunities — involving foreign currency. The rabbonim explain that too many cautiously try their hand and when they taste a bit of success, they get in heavy and the results are known in too many cases. They warn against these deceptive practices.

The members of the Badatz explained it is fitting to act with “the same determination against this trend, against those who persuade the tzibur to risk it all on such investments in foreign ventures, no less so than the protests against parking lots and businesses that violate the shabbos”.

(Yechiel Spira – YWN Israel)




11 COMMENTS

  1. I see the problem with using Gemach $, or in convincing others to make risky investments, but if it is my own $ and I understand I can lose it is there still a problem?

  2. Unless the person was doing something very weird, such as investing in Zimbabwe dollars, the only way to lose ALL your money would be to engage in very questionable hedging transaction or using the money to borrow on margin. This is more than someone merely investing in a foreign currency account, or even by shares in stocks or mutual funds.

    Speculating in foreign currencies, or in stocks for that matter, especially in the hope of a short term gain is virtually impossible for someone who is not a professional trader attached to a major trading house or investment bank. The “big boys” control the supply of information and the ability to make quick transactions on breaking news(and in FOREX, milliseconds matter).

    Legitimate long term investments don’t pose the problem (nervous about the value of the shekel, take out a CD in dollars) – but I doubt that is the issue here. Frankly, a speculator would be better off betting on things such as horse races, baseball games or politics, rather than trying to compete with Wall Street or the City.

  3. Isnt the real issue here that Gmach monies should be used for household expenses of people who need of a short term loan, not for investments and certainly not for financial speculation. (If you can do this, then why not borrow the money interest free and then put in into a safe CD, earning guaranteed returns on the Gmach’s dime)

    It would seem that when you take a loan from a Gmach you should have to describe more or less what it is for, and how you plan to repay it.

    And if you have your own money and want to speculate on Forex, well, I cant say its a good idea, but seems to be a different issue that what is going on in this case, at least as reported.

  4. total mistake! they should have said that people who haven’t studied economics in depth shouldn’t trade currencies.
    there’s nothing wrong with someone trading if they have many years of background in the mechanics behind economic theory.
    the problem is that people who are just out of a yeshiva education in boro park take their money and throw it into currencies thinking that they know what they’re doing….
    go to college!

  5. Foreign currency speculation is among the riskiest investments around, they aare even less stable than derivatives, which novice investors are strongly cautioned against. That beiogn said, the gemach is not entirely blameless, as previously mentioned, they should have determined that the borrower really needed the money for basic needs. Also, what gemach gives out NIS 100,000 loans?

  6. #7 -It is implausible that a Rav would ban trading in or holding foreign currencies. Can you imagine trying to go shopping in Boro Park with shekels or euro? Most people outside of the United States routinely hold multiple currencies.Frum people are much more likely than most Americans to travel between countries. Indeed, some frum people in Israel refuse to use the “zionist” currency and conduct all their business in what is to them a foreign currency. Back when the shekel was weak and the dollar was strong, Israelis routinely tried to hold assets in dollar accounts and often stated prices in dollars.

    The article is a “third hand” account of what was originally said, and there is much reason to suspect the intermediate tellers are not especially educated in economics. I believe the original, if you ask the rabbanim in question for details, is that one shouldn’t be “playing the market” with FOREX, and trying to get a profit based on fluctuations in relative currency values – but that they didn’t object to things like holding and using multiple currencies, or having savings accounts or other investments denominated in more than one currency.