A:
A loan contract is supposed to be a contract of kindness and co-operation among Muslims for it involves benefiting Muslims, fulfilling their needs, and a great reward from Allah (Glorified and Exalted be He). Therefore, it is impermissible to lend him one thousand Pesos to be repaid in US dollars because doing so contradicts the purpose for which loans are basically Mashru` (Islamically acceptable). (Part No. 14; Page No. 148)
Consequently, the debtor has to repay the equivalent of the loan he borrowed and it is impermissible to stipulate any increase. May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.
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A loan contract is s...
