RBI and MMA Forge Pathway for Local Currency Trade

The Reserve Bank of India and the Maldives Monetary Authority signed an MoU to enable the use of Indian Rupee and Maldivian Rufiyaa in bilateral trade. This initiative aims to reduce costs, improve efficiency, and strengthen economic ties between India and the Maldives.

The Reserve Bank of India (RBI) and Maldives Monetary Authority (MMA) have signed a Memorandum of Understanding (MoU) in Mumbai, creating a framework to facilitate cross-border trade using local currencies—the Indian Rupee (INR) and Maldivian Rufiyaa (MVR). The MoU was executed on Thursday, attended by RBI Governor Shaktikanta Das and MMA Governor Ali Hashim.

An official statement from RBI outlined that the agreement focuses on enabling the use of INR and MVR for various economic and financial dealings, including current and permissible capital account transactions. It is anticipated that this move will streamline trade by cutting down transaction costs and shortening settlement times.

The RBI emphasized that the new framework would empower exporters and importers to invoice and settle in their home currencies, thereby establishing trading activity in the INR-MVR currency pair within the foreign exchange market. This effort is expected to reduce reliance on third-party currencies, such as the US Dollar, enhancing bilateral trade and financial coordination between the two nations.

This strategic collaboration marks a significant milestone in fortifying ties between India and the Maldives, reflecting the mutual commitment to advancing economic partnership. By promoting the use of local currencies, the initiative aims to deepen financial integration and contribute to sustainable growth in the region.

(With inputs from agencies.)