This question actually relates to merchandise loans (se’ah b’se’ah), not monetary loans, because foreign currency is considered merchandise or a commodity relative to the local currency (C.M. 203:8). Therefore, it is permitted to borrow foreign currency only in the three situations mentioned below:

1. Yesh lo: If the borrower already has a shekel, he may borrow more. The lender may even sell or give the borrower a shekel, and then lend him additional shekalim (Y.D. 162:2).

2. Yatza hasha’ar: Some authorities suggest that since NIS are readily available on the foreign currency exchange, it should be considered as yatza hasha’ar. However, most disagree, because the exchange rate fluctuates constantly (The Laws of Ribbis, 14:14).

3. Davar Mu’at: The application of davar mu’at to foreign currency is highly questionable, since it is not common to borrow foreign currency from neighbors.

All these halachos apply, conversely, to borrowing and repaying dollars in Israel.  Although the use of the dollar is fairly common there, it is not a legally acknowledged currency and therefore considered a commodity (Bris Yehuda 20:9).

Q: My son is learning in a yeshivah in Eretz Yisrael, and I send him spending money every so often. He recently asked me for more money. I told him that I know someone going to Eretz Yisrael in a few days, and asked him to borrow money from a friend until the person arrives. He said he could, but added that he had heard that borrowing and then returning dollars in Eretz Yisrael could be a ribbis issue.

Can you please delineate what we may and may not do?

A: The Torah prohibition of ribbis applies to cases in which a person borrows money or items from someone on condition that he will repay what he borrowed, with additional payment.

Mid’Oraisa, if a borrower returns the same amount he borrowed, there is no issue of ribbis, but Chazal prohibited borrowing produce or other items with a promise to return the same amount, out of concern that the price would rise in the interim, and although the quantity he returns will be the same, the value will be higher. This prohibition is called se’ah bise’ah, named for the prototype case in which someone borrows a se’ah of produce and returns a se’ah (Shulchan Aruch, Yoreh De’ah 162:1).

The prohibition of se’ah bise’ah applies only to produce or items that tend to have price fluctuations. It generally doesn’t apply to currency, which, from a halachic perspective, does not fluctuate in value. That is only true, however, for the local currency, not to foreign currency (or cryptocurrency), which is categorized as “produce” and is subject to this prohibition.

Some poskim rule that since dollars are readily available in Eretz Yisrael and the prices of certain items are set in dollars, it is considered a “local currency” in Eretz Yisrael. But other poskim point out that recently, the shekel has stablized and the dollar tends to fluctuate, and prices are no longer set in dollars, so dollars are considered a foreign currency and are subject to the halachos of se’ah bise’ah (see Mishnas Ribbis 6, fn. 3).

When establishing the halachah of se’ah bise’ah, Chazal included several leniencies that need to be considered.

One leniency is called “yatza hashaar.” This means that when the season for a certain type of produce begins, and that produce is readily available in stores, a price for it is typically set, and does not tend to rise or fall significantly over the course of several days. Chazal established that once the price has been set, a person may borrow and return se’ah bise’ah, because the borrower could easily have purchased produce at the price at which he borrowed it. Although he didn’t actually do so, we consider it as though he already bought produce on the lender’s behalf, and if it rises in value, it occurs in the lender’s possession (Yoreh De’ah 162:3).

According to many poskim, this leniency does not apply to foreign currency, because there is no set price that will hold for a number of days; the price fluctuates constantly (see Bris Yehudah 24:33).

Another leniency instituted by Chazal is “yesh lo.” This means that if, at the time of the loan, the borrower owns the same type of produce or item, he may borrow and repay se’ah bise’ah. Since the prohibition is mid’Rabbanan, we view it as though the produce the borrower owned at the time of the loan was returned to the lender immediately and rose in value in his possession, so there is no issue of ribbis. Chazal extended this leniency to cases in which the borrower owns only a small amount of that produce or item. Although he doesn’t have the full amount he is borrowing to repay immediately, he is allowed to borrow se’ah bise’ah on the basis of the small amount he does have (Yoreh De’ah 162:2).

We will now apply these halachos to your case.

If your son has even one dollar in his possession, he should hold onto it, and he can borrow dollars from his friend under the leniency of yesh lo.

If your son doesn’t have a dollar, the lender can give him a dollar as a gift so that he can borrow the full amount based on that dollar. He can even gift him that dollar out of a hundred-dollar bill, with the remaining 99 dollars temporarily considered a pikadon (item given over for safeguarding), and then loan the 99 dollars to him (Bris Yehudah 17, fn. 42).

If your son doesn’t have any dollars, and he borrowed money nonetheless, then if the value of the dollar rises against the shekel before he repays, he should find out the value of the dollar in shekalim at the time of the loan, and repay that amount in either dollars or shekalim to the lender.

In many circumstances, if your son and the lender are friends who often do favors for one another, since the rise in value is minor and they had no intention of engaging in a ribbis transaction, your son may pay back the amount of dollars he borrowed (Rema 162:1). They must be careful, however, not to say explicitly that your son will pay back in dollars that are worth more than they were at the time of the loan (Chelkas Binyamin 162:23).