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Malaysia’s Kelantan State Adopting Islamic Currency Alongside Ringgit
August 12, 2010

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Kuala Lumpur. A Malaysian state on Thursday launched the Islamic dinar and dirham as an alternative currency, allowing the golden and silver coins to be used as legal tender alongside conventional banknotes.

Authorities in Kelantan state, which is ruled by the Islamic opposition party PAS, said the Islamic currencies would be used in many shops in the state in addition to the national currency, the ringgit.

“We have over 1,000 shops that have signed up to our campaign and agreed to accept the dinar and dirham for the purchase of goods,” said Husam Musa, a state cabinet minister.

He said boards had been erected in the main market in the state capital Kota Bharu to show the conversion table between the dinar and ringgit, and participating shops would encourage people to use the coins.

“The response has been very positive and all the coins, which were worth a total of 2 million ringgit [$630,000], have been sold out at the launch today,” said Husam, who is in charge of economic planning.

According to Islamic law, the dinar measures 4.25 grams of gold, while the dirham is three grams of pure silver. A golden coin is equivalent to around 582 ringgit while the silver coin is worth around 13 ringgit, but their values fluctuate according to market prices.

Husam said the dinar and dirham currencies could also be used in dealings with state government agencies, such as paying “zakat,” or alms for the poor.

There has been a long debate in Malaysia, a Muslim-majority country with large ethnic Chinese and Indian communities, to introduce the coins as legal tender nationally.

Former Prime Minister Abdullah Ahmad Badawi, whose administration promoted a moderate form of Islam shot down the proposal to use the Islamic currencies while his predecessor, Mahathir Mohamad, was an advocate of the dinar.



Agence France-Presse