9-3-2024 (JAKARTA) The Reserve Bank of India (RBI) and Bank Indonesia (BI) have inked a Memorandum of Understanding (MoU) to establish a framework aimed at promoting the use of local currencies—Indian rupee (INR) and Indonesian rupiah (IDR). The signing ceremony took place in the presence of RBI Governor Shaktikanta Das and Bank Indonesia Governor Perry Warjiyo.
The comprehensive MoU encompasses all current account transactions, permissible capital account transactions, and any other mutually agreed-upon economic and financial transactions. The framework allows exporters and importers to invoice and transact in their respective domestic currencies, fostering the development of the INR-IDR foreign exchange market.
This initiative is anticipated to streamline costs and settlement times for transactions, providing a more efficient platform for trade activities. The move is a significant step towards reinforcing bilateral cooperation between RBI and BI, with the use of local currencies expected to facilitate increased trade between the two nations.
Indonesia holds the position of India’s second-largest trading partner in the South-East Asia region. Bilateral trade has seen substantial growth, surging from US$6.9 billion in 2007 to US$38.84 billion in 2023. Additionally, Indonesia ranks 33rd in terms of Foreign Direct Investment (FDI) equity inflows into India, with cumulative FDI reaching US$648.39 million from April 2000 to March 2023.
