India, Maldives ink pact for cross-border transactions in local currencies

The Reserve Bank of India (RBI) and the Maldives Monetary Authority (MMA) have signed a Memorandum of Understanding (MoU) to establish a framework for promoting the use of local currencies—Indian Rupee (INR) and Maldivian Rufiyaa (MVR)—for cross-border transactions.

 

This framework will enable exporters and importers to invoice and settle in their respective domestic currencies, which, in turn, will facilitate the development of trading in the INR-MVR pair in the foreign exchange market. The use of local currencies will optimise costs and reduce settlement time for transactions, the RBI said in a statement.

 

The MoU was signed by Shaktikanta Das, governor, RBI, and Ahmed Munawar, governor, Maldives Monetary Authority.

 

Last year, the RBI signed a similar agreement with the Central Bank of the UAE in Abu Dhabi.

 

“The MoU encourages the use of INR and MVR in current account transactions, permissible capital account transactions, and any other economic and financial transactions as agreed upon by both countries,” the statement said.

 

“This collaboration marks a key milestone in strengthening bilateral cooperation between the RBI and MMA,” the RBI added, noting that the use of local currencies in bilateral transactions will eventually contribute to promoting trade between India and Maldives, deepen financial integration, and strengthen economic relations between the two countries.