Mumbai : The Reserve Bank of India (RBI) and the Bank Indonesia (BI) inked a Memorandum of Understanding (MoU), aimed at establishing a framework to enhance the usage of local currencies, namely the Indian Rupee (INR) and the Indonesian Rupiah (IDR), for cross-border transactions, on Thursday.

The MoU signing ceremony saw the participation of RBI Governor Shaktikanta Das and Bank Indonesia Governor Perry Warjiyo.

This MoU marks a significant milestone in fostering cooperation between India and Indonesia in facilitating cross-border transactions in their respective local currencies (INR and IDR).

The framework set forth by the MoU encompasses all current account transactions, permissible capital account transactions, and any other economic and financial transactions mutually agreed upon by both nations.

One of the primary objectives of this framework is to facilitate exporters and importers to invoice and settle transactions in their domestic currencies. This initiative is expected to pave the way for the development of a robust INR-IDR foreign exchange market.

“Use of local currencies would optimise costs and settlement time for transactions,” the RBI said in a statement.

Moreover, it is anticipated that leveraging local currencies in bilateral transactions will not only promote trade between India and Indonesia but also foster deeper financial integration, strengthening the longstanding historical, cultural, and economic ties between the two nations.