The RBI and BOM signed a MoU to promote the use of local currencies in bilateral transactions, covering current and permissible capital account transactions. This initiative allows invoicing and payments in INR and MUR to enhance trade efficiency. It aims to reduce costs and improve settlement times, strengthening economic ties between India and Mauritius.
The Reserve Bank of India (RBI) and the Bank of Mauritius (BOM) have formalized an agreement through a Memorandum of Understanding (MoU) aimed at facilitating the use of their local currencies, specifically the Indian Rupee (INR) and the Mauritian Rupee (MUR), for international transactions. This initiative was signed by RBI Governor Sanjay Malhotra and BOM Governor Rama Krishna Sithanen, in a ceremony attended by Prime Minister Narendra Modi and the Prime Minister of Mauritius, Navinchandra Ramgoolam.
The MoU encompasses all current account transactions and permissible capital account transactions, which have been mutually agreed by both nations. This framework allows businesses to invoice and complete payments in their local currencies, thereby fostering the establishment of an INR-MUR market.
Implementing local currency transactions aims to lower transaction fees and enhance the efficiency of settlement processes, which in turn optimizes cross-border trade. The RBI has emphasized that this collaboration signifies a substantial advancement in enhancing bilateral relations between the two central banks.
According to the RBI, “Use of local currencies in bilateral transactions will eventually contribute to promoting trade between India and Mauritius as well as deepen financial integration and strengthen the historical, cultural, and economic relations between India and Mauritius.”
The signing of the MoU between the Reserve Bank of India and the Bank of Mauritius marks a significant step towards enhancing economic collaboration and trade efficiency between the two nations. By promoting the use of local currencies, the agreement is poised to reduce costs and streamline transactions, thereby fostering deeper economic ties and historical relations. This initiative is indicative of broader cooperation efforts stemming from Prime Minister Modi’s visit to Mauritius, which also included numerous other agreements and collaborative projects.
Original Source: upstox.com
