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India & Maldives sign MoU to facilitate local currency transactions

22 Nov '24

2 min read

India & Maldives sign MoU to facilitate local currency transactions

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RBI and MMA have signed an MoU to promote the use of local currencies, the Indian rupee (INR) and the Maldivian rufiyaa (MVR), for bilateral transactions.
This framework aims to enable trade settlement in domestic currencies, reduce costs, and enhance efficiency.
The collaboration strengthens economic ties, deepens financial integration, and boosts trade between India and the Maldives.

The Reserve Bank of India (RBI) and the Maldives Monetary Authority (MMA) have signed a memorandum of understanding (MoU) aimed at promoting the use of local currencies for bilateral transactions. The agreement, signed yesterday in Mumbai by RBI governor Shaktikanta Das and MMA governor Ahmed Munawar, establishes a framework to facilitate cross-border transactions using the Indian rupee (INR) and the Maldivian rufiyaa (MVR).

The MoU seeks to enable the use of INR and MVR for current account transactions, permissible capital account transactions, and other agreed-upon economic and financial exchanges. This initiative will allow exporters and importers to invoice and settle transactions in their domestic currencies, paving the way for the development of an INR-MVR trading pair in the foreign exchange market. The move is expected to reduce costs and settlement times for cross-border trade, Puneet Pancholy, chief general manager of RBI, said in a press release.

This collaboration marks a significant step in enhancing bilateral relations between the two countries. By promoting local currencies in trade, the agreement aims to boost economic ties, strengthen financial integration, and encourage greater trade activity between India and the Maldives.

Both nations view this partnership as a milestone in fostering economic cooperation and envision a deeper financial relationship driven by this local currency framework.

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