"The MoU was signed 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," RBI said in a statement.
This framework would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of an INR-IDR
foreign exchange market. "Use of local currencies would optimise costs and settlement time for transactions," RBI said.
The MoU was signed by
RBI Governor Shaktikanta Das and Bank Indonesia Governor Perry Warjiyo. "The MoU ... aims to promote the use of INR and IDR bilaterally," RBI said.
The MoU covers all current account transactions, permissible capital account transactions and any other economic and financial transactions as agreed upon by both countries, it added.
The central bank further said the 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," it added.
