RBI and Bank Indonesia Sign MoU to Promote Local Currency Use

The Reserve Bank of India (RBI) and Bank Indonesia (BI) have inked a Memorandum of Understanding (MoU) aimed at bolstering the utilization of local currencies – the Indian Rupee (INR) and the Indonesian Rupiah (IDR) – for cross-border transactions.

Key Points

1. Objective of the MoU: The MoU, signed in Mumbai by RBI Governor Shaktikanta Das and Bank Indonesia Governor Perry Warjiyo, establishes a framework to foster the use of INR and IDR in cross-border transactions.

2. Promoting Bilateral Trade: By facilitating transactions in local currencies, the collaboration seeks to enhance trade between India and Indonesia, fostering deeper financial integration and reinforcing the longstanding economic ties between the two nations.

3. Scope of the MoU: Covering all current account transactions, permissible capital account transactions, and other economic and financial transactions mutually agreed upon, the MoU provides a comprehensive framework for cooperation.

4. Benefits for Exporters and Importers: The framework enables exporters and importers to invoice and settle transactions in their domestic currencies, leading to the development of an INR-IDR foreign exchange market and optimizing costs and settlement times.