RBI and Bank Indonesia join hands to use local currency in bilateral transactions
Synopsis
The Reserve Bank of India (RBI) and the Bank Indonesia (BI) have signed a Memorandum of Understanding (MoU) to establish a framework promoting the use of local currencies, the Indian Rupee (INR) and the Indonesian Rupiah (IDR), for cross-border transactions
The Reserve Bank of India (RBI) and the Bank Indonesia (BI) have signed a Memorandum of Understanding (MoU) on Thursday in Mumbai aimed at enhancing bilateral economic ties. The MoU aims to establish a framework promoting the use of local currencies, specifically the Indian Rupee (INR) and the Indonesian Rupiah (IDR), for cross-border transactions.
The MoU, signed in the presence of RBI Governor Shaktikanta Das and his Bank Indonesia counterpart, Perry Warjiyo, covers various aspects of cross-border transactions between India and Indonesia. It encompasses all current account transactions, permissible capital account transactions, and other economic and financial transactions agreed upon by both countries.
The primary objective is to encourage the bilateral use of the INR and IDR, facilitating exporters and importers to invoice and settle transactions in their respective domestic currencies. This initiative is expected to foster the development of an INR-IDR foreign exchange market, optimizing transaction costs and settlement times.
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The collaboration between RBI and BI represents a significant milestone in strengthening bilateral cooperation. It is anticipated that the use of local currencies in bilateral transactions will not only promote trade between India and Indonesia but also deepen financial integration.
Furthermore, it will reinforce the long-standing historical, cultural, and economic relations between the two nations.
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