Maldives and India sign MoU to use local currencies for cross-border transactions

Maldives Monetary Authority (MMA) and the Reserve Bank of India (RBI) have signed a Memorendum of Understanding (MoU), to use their respective local currencies-Maldivian Rufiyaa (MVR) and Indian Rupee (INR)-for cross-border transactions. The agreement was signed by the Governor of MMA Ahmed Munawwar and the Governor of RBI Shaktikanta Das. The MoU encorages the use of local currencies for any financial transactions between the two countries, inclduing transactions from the current account and permitted capital account. This arrangement will facilitate businesses in both countries to issue bills and ensure the settlement of bills in their own respective currencies, when importing goods and services. This would in turn, create an opportunity for the currencies of both nations, to be used in the foreign exchange market, reducing expenses and expediting the settlement process. This decision, is an important step forward in enhancing the ties between MMA and RBI. The utilisation of local currency in cross-border transactions will also pave the path to expand trade between the two countries, strengthening bilateral trade relations. During President Dr. Mohamed Muizzu’s visit to India in October, he engaged in comprehensive discussions, pertaining to the utilisation of local currencies in cross-border transactions. This visit also saw the official inauguration of RuPay card service in the Maldives. Additionally, President Dr. Muizzu, decided to take steps to introduce India’s Unified Payment Interface (UPI) in the Maldives. This initiative, a recommendation from the Cabinet, aims to enhance the Maldivian economy by promoting financial inclusion, improving transaction efficiency, and strengthening digital infrastructure.