Mumbai: India and the Maldives have signed an agreement to allow trade between the two countries using their local currencies – Indian Rupee (INR) and Maldivian Rufiyaa (MVR).
The Reserve Bank of India (RBI) and the Maldives Monetary Authority (MMA) formalized the agreement with a Memorandum of Understanding (MoU). This framework will enable businesses to settle trade payments in their own currencies, reducing the need for third-party currencies like the US dollar. The move is expected to lower transaction costs and speed up settlements for exporters and importers.
The MoU was signed by RBI Governor Shaktikanta Das and MMA Governor Ahmed Munawar. It covers trade-related payments, some capital account transactions, and other financial exchanges agreed upon by the two countries.
Using local currencies for cross-border transactions is seen as a step toward simplifying trade processes and strengthening economic ties. Analysts believe it could make trade easier and more cost-effective for businesses in both countries.
This agreement follows a similar pact India signed with the UAE last year to encourage the use of local currencies in trade. Such agreements are part of a broader effort to promote regional cooperation and reduce reliance on global currencies.
The RBI noted that the initiative is aimed at enhancing bilateral trade, fostering financial collaboration, and deepening economic integration between India and the Maldives. This shift could also encourage businesses in both nations to explore new trade opportunities, further strengthening their economic partnership and paving the way for more collaborative financial initiatives in the future.
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