Billdesk Payment Gateway: India and Indonesia to use national currencies for bilateral trade

On 8 March, the Central Bank of India announced that the Reserve Bank of India (RBI) had entered into a Memorandum of Understanding (MoU) with the Central Bank of Indonesia (CBI) regarding the use of local currency in bilateral trade.

The statement emphasised that "the two sides have signed a Memorandum of Understanding (MoU) aimed at establishing a framework to promote the use of local currencies, particularly the Indian rupee and the Indonesian rupee, for the settlement of cross-border transactions. The use of local currencies optimises transaction costs and settlement times."

The Indian regulator noted that the use of local currencies in bilateral trade would ultimately facilitate the growth of trade between India and Indonesia, while deepening financial integration and strengthening economic ties between the two countries. This arrangement will enable exporters and importers to invoice and make payments in their respective local currencies, thereby boosting their foreign exchange markets.

Indonesia is not the first country to trade in local currency with India. In July last year, the Reserve Bank of India signed two memorandums of understanding (MoUs) with the Central Bank of the United Arab Emirates (UAE) on cross-border transactions using local currencies and on coordinating the exchange of payments and information systems between the two countries.