India, Indonesia sign pact to trade in local currencies

RBI governor Shaktikanta Das (Photo: https://newsonair.gov.in

New Delhi (VNA) – The Reserve Bank of India (RBI) and Bank Indonesia (BI) on March 7 signed and exchanged a Memorandum of Understanding (MoU) to establish a framework to promote the use of local currencies Indian rupee (INR) and Indonesian rupiah (IDR)). The MoU was signed in the presence of RBI governor Shaktikanta Das and Bank Indonesia Governor Perry Warjiyo.

The MoU covers all current account transactions, permissible capital account transactions and any other economic and financial transactions agreed upon by both countries.

The RBI stated that this framework would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of INR-IDR foreign exchange market. The use of local currencies would optimise costs and settlement time for transactions.

This collaboration marks a key milestone in strengthening bilateral cooperation between the RBI and BI as use of local currencies in bilateral transactions will eventually contribute to promoting trade between the two nations.

Indonesia is the second largest trading partner of India in the ASEAN region. Bilateral trade increased from 6.9 billion USD in 2007 to 38.84 billion USD in 2023. Indonesia occupies the 33rd position in FDI equity inflows into India with a cumulative FDI of 648.39 million USD in the period from April 2000 to March 2023./.