RBI, BANK INDONESIA SIGN MOU TO PROMOTE USE OF LOCAL CURRENCIES FOR CROSS-BORDER TRANSACTIONS

 

India (RBI) and Indonesia (BI) sign an agreement to facilitate trade using the Indian Rupee (INR) and Indonesian Rupiah (IDR). This agreement has the potential to reduce trade barriers between India and Indonesia, promoting economic growth.

Key Details

1. Memorandum of Understanding (MoU): Establishes a framework for INR-IDR transactions.
2. Signatories: RBI Governor Shaktikanta Das and BI(Bank Indonesia) Governor Perry Warjiyo.
3. Scope: Covers current account transactions, some capital account transactions, and other mutually agreed financial dealings.

Goals

1. Promote India-Indonesia Trade: Reduce reliance on 3rd-party currencies (e.g., US dollar).
2. Deepen Financial Integration: Strengthen economic ties between the countries.
3. Develop INR-IDR Foreign Exchange Market: Facilitate more direct exchange between the currencies.

Benefits

1. Lower Transaction Costs: Avoids multiple currency conversions.
2. Faster Settlement Times: Time saving trade processes.
3. Enhances Economic Ties: Builds on historical, cultural, and economic connections.

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