The MoU covers all present account transactions, permissible capital account transactions and every other financial and monetary transactions as agreed upon by each nations, says RBI.
The MoU on establishing a framework for cooperation within the space of cross-border transactions in native currencies between India and Indonesia goals to promote the use of Indian Rupee and Indonesian Rupiah bilaterally
The Reserve Bank of India (RBI) and the Bank Indonesia (BI) signed a memorandum of understanding (MoU) on Thursday, March 7, to set up a framework to promote the use of native currencies for cross-border transactions, in accordance to an announcement.
The MoU was signed by RBI Governor Shaktikanta Das and Bank Indonesia Governor Perry Warjiyo.
“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 INR (Indian Rupee) and IDR (Indonesian Rupiah) bilaterally. The MoU covers all current account transactions, permissible capital account transactions and any other economic and financial transactions as agreed upon by both countries,” the RBI stated within the assertion on March 7.
It added that this framework would allow exporters and importers to bill and pay of their respective home currencies, which in flip would allow the event of an INR-IDR overseas alternate market. The use of native currencies would optimise prices and settlement time for transactions.
“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,” the RBI said.
