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 added.
Reserve Bank of India. (Photo: IANS)
The Reserve Bank of India has signed an agreement with Bank Indonesia to promote the use of local currencies for cross-border transactions.
A memorandum of understanding was signed between RBI Governor Shaktikanta Das and his Bank Indonesia counterpart Perry Warjiyo, the RBI said in a release.
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“The MoU on establishing a framework for cooperation in the area of cross-border transactions in local currencies between India and Indonesia aims to promote the use of Indian Rupee (INR) and Indonesian Rupiah (IDR) bilaterally,” the RBI said in the release.
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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 added.
As per the RBI statement, this framework would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of an INR-IDR foreign exchange market.
Use of local currencies would optimize costs and settlement time for transactions.
Notably, the RBI has last year also signed two MoUs with Central Bank of the UAE to establish a Framework to Promote the Use of Local Currencies for Cross-border Transactions and cooperation for interlinking their payment and messaging systems.
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