Borrowed in euros – at what exchange rate should he repay
Question
Shalom,
A person borrowed 80 euros and wants to repay in shekels. At what exchange rate must he repay?
Answer
Shalom u’vracha,
If the loan was taken in a place where the circulating currency is the euro, he repays according to the current exchange rate. If the loan was taken in Eretz Yisrael, it depends on the law of “se’ah b’se’ah”: if he borrowed with a permitted arrangement, he may repay according to the current exchange rate, but if the loan was in a prohibited manner, he repays according to the lower rate.
Source
Foreign currencies have the halachic status of produce, since they are not the circulating currency in the place of the loan, and therefore the law of lending them is like the law of “se’ah b’se’ah”. In order to permit such a loan, one needs one of the permissive factors explained in Siman 162: he already possesses that amount, the rate has already been fixed, the difference is negligible, or he turned it into “money” (i.e. they stipulated the repayment according to the present value). If he borrowed with a permitted arrangement, it is explained there in the Shulchan Aruch that he may repay even if the currency has appreciated.
If he borrowed in a prohibited manner and the currency went up, he must pay according to the exchange rate at the time of the loan. All this applies when the loan was in Eretz Yisrael, but if it was in a place where that currency is the circulating one, it is like any regular money, and he repays according to the current exchange rate.
