RBI, Bank Indonesia Sign MoU to Promote Bilateral Trade in Local Currencies

By siliconindia  |  Thursday, 07 March 2024, 06:32:39 PM IST

RBI, Bank Indonesia Sign MoU to Promote Bilateral Trade in Local Currencies
The Reserve Bank of India (RBI) and the Bank Indonesia (BI) have formalized a significant agreement by signing a memorandum of understanding (MoU) aimed at fostering the utilization of local currencies, the Indian Rupee (INR) and the Indonesian Rupiah (IDR), for bilateral transactions. The MoU, inked by RBI Governor Shaktikanta Das and Bank Indonesia Governor Perry Warjiyo, establishes a framework for cooperation in cross-border transactions using local currencies between the two nations.
Covering current account transactions, permissible capital account transactions, and other mutually agreed economic and financial transactions, the MoU facilitates invoicing and payments in domestic currencies for exporters and importers. This arrangement is anticipated to pave the way for the development of an INR-IDR foreign exchange market, optimizing costs and settlement times for transactions.
The collaboration signifies a pivotal step in bolstering bilateral cooperation between RBI and BI. By promoting the use of local currencies in bilateral transactions, the agreement aims to enhance trade between India and Indonesia while fostering financial integration. The move is expected to strengthen the enduring historical, cultural, and economic ties between the two nations.
The MoU reflects a strategic initiative to deepen economic engagement and contribute to the growth of a more robust and interconnected financial landscape between India and Indonesia. As both countries commit to this framework, the use of INR and IDR in cross-border transactions is poised to facilitate smoother and more efficient trade relations, ultimately benefiting businesses and economies on both sides.

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