RBI signs MoU with Bank Indonesia to Promote Use of Local Currencies for Bilateral Transactions

The Reserve Bank of India and the Bank Indonesia signed a Memorandum of Understanding (MoU) today in Mumbai for establishing a framework to promote the use of local currencies viz., the Indian Rupee (INR) and the Indonesian Rupiah (IDR) for cross-border transactions.

The MoU was signed by Shri Shaktikanta Das, Governor of the Reserve Bank of India and Mr. Perry Warjiyo, Governor of Bank Indonesia.

The MoU between India and Indonesia to build a framework for cooperation in the area of cross-border transactions in local currencies intends to increase the bilateral use of INR and IDR. The MoU applies to all current account transactions, permissible capital account transactions, and any other economic and financial transactions agreed upon by both governments.

This framework would allow exporters and importers to invoice and pay in their respective local currencies, facilitating the formation of an INR-IDR foreign exchange market. The use of local currencies would optimise transaction costs and settlement time.

This collaboration is a significant step toward increasing bilateral cooperation between the RBI and BI. The use of local currencies in bilateral transactions will eventually help to promote trade between India and Indonesia, as well as deepen financial integration and strengthen the long-standing historical, cultural, and economic ties between the two countries.