India, Maldives to use local currencies in cross border transactions

Reserve Bank of India 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 and Maldivian Rufiyaa in cross-border transactions. The MoU was signed by RBI Governor Shaktikanta Das and MMA Governor Ahmed Munawar in Mumbai on Thursday. The MoU encourages the use of Indian Rupee (INR) and Maldivian Rufiyaa (MVR) in current account transactions, permissible capital account transactions, and any other economic or financial transactions agreed upon by both countries.

The MoU covers all current account transactions, permissible capital account transactions and any other economic and financial transactions as agreed upon by both countries. It marks a key milestone in strengthening bilateral cooperation between RBI & MMA. @rbi; @MMA_Maldives

— ReserveBankOfIndia (@RBI) November 21, 2024

This framework will allow exporters and importers to invoice and settle payments in their respective domestic currencies, facilitating the development of trading in the INR-MVR pair in the foreign exchange market.The use of local currencies is expected to optimize transaction costs and settlement times. According to the official note, this collaboration marks a significant milestone in strengthening bilateral cooperation between the RBI and MMA.The use of local currencies in bilateral transactions will not only promote trade between India and the Maldives but also deepen financial integration and strengthen economic ties between the two nations.