Maldives, India ink pact for local currency trade
The MoU comes weeks after MMA entered into a bilateral currency swap agreement with the Reserve Bank of India.
Maldives Monetary Authority (MMA) and the Reserve Bank of India (RBI) on Thursday signed a Memorandum of Understanding (MoU) in Mumbai to establish a framework promoting the use of local currencies – the Maldivian Rufiyaa (MVR) and the Indian Rupee (INR) – for cross-border transactions between the Maldives and India.
The MoU was signed by Ahmed Munawar, Governor of the Maldives Monetary Authority, and Shri Shaktikanta Das, Governor of the Reserve Bank of India.
In a statement, MMA said the agreement encourages the use of local currencies for current account transactions, permissible capital account transactions, and other mutually agreed economic and financial transactions. This initiative will allow businesses in both countries to invoice and settle transactions in their respective domestic currencies.
"Additionally, the framework aims to facilitate trading in the MVR-INR currency pair within the foreign exchange market. The use of local currencies will reduce costs and improve settlement time," the statement read.
"This MoU is a significant step forward in enhancing trade and financial ties between the Maldives and India. By enabling the use of local currencies for bilateral transactions, it will strengthen economic cooperation, promote trade, and foster closer financial integration between the two countries."
The MoU comes weeks after MMA entered into a bilateral currency swap agreement with the Reserve Bank of India.
According to the MMA, the agreement allows for multiple withdrawals up to a maximum limit of $400 million, as well as INR 30 billion, under the existing Framework on Currency Swap Arrangement for SAARC Countries, 2024-2027.
