RBI and Bank Indonesia Ink MoU to Boost Bilateral Transactions Using Local Currencies

GG News Bureau
Mumbai, 11th March. The Reserve Bank of India (RBI) and the Bank Indonesia (BI) have signed a significant agreement aimed at fostering the utilization of local currencies, namely the Indian Rupee (INR) and the Indonesian Rupiah (IDR), for cross-border transactions.

The Memorandum of Understanding (MoU) was signed in Mumbai on March 7, 2024, by Shaktikanta Das, Governor of RBI, and Perry Warjiyo, Governor of Bank Indonesia.

The MoU establishes a framework for cooperation in facilitating cross-border transactions in local currencies between India and Indonesia.
Its primary objective is to promote the use of INR and IDR for bilateral transactions, covering all current account transactions, permissible capital account transactions, and other economic and financial transactions agreed upon by both nations.

By enabling exporters and importers to invoice and settle transactions in their respective domestic currencies, this framework aims to catalyze the development of an INR-IDR foreign exchange market.

Additionally, utilizing local currencies is expected to streamline transaction costs and settlement timelines.

This collaboration represents a significant milestone in strengthening bilateral cooperation between RBI and BI. Accepting local currencies for bilateral transactions is expected to bolster trade between India and Indonesia, fostering financial integration and reinforcing the enduring historical, cultural, and economic ties between the two nations.

The signing of this MoU underscores the commitment of both central banks to explore innovative avenues to enhance bilateral economic relations and facilitate seamless cross-border transactions. It signifies a proactive step towards deepening financial connectivity and reinforcing the longstanding partnership between India and Indonesia.