Bank Indonesia, RBI sign MoU to promote ₹, IDR use for bilateral trade

RBI governor Shaktikanta Das and Bank Indonesia (BI) counterpart Perry Warjiyo signed the MoU, said an RBI statement.

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

This is India’s second such local currency trade agreement after one with the United Arab Emirates (UAE).

The arrangement would enable exporters and importers to invoice and pay in their domestic currencies, helping the development of an INR and IDR foreign exchange market. Use of local currencies would optimise costs and settlement time for transactions.

Use of local currencies would optimise costs and settlement time for transactions, the statement said.

“This collaboration marks a key milestone in strengthening bilateral cooperation between RBI and BI. Use of local currencies in bilateral transactions will eventually contribute to promoting trade between India and Indonesia as well as deepen financial integration and strengthen the long historical, cultural and economic relations between India and Indonesia,” it added.

RBI introduced the INR trade settlement mechanism in July 2022 following the wish of several countries to reduce dependence on the US dollar for trade settlement after the West imposed sanctions on Russia for invading Ukraine in February that year.

Fibre2Fashion News Desk (DS)