In a move towards strengthening economic integration, the Reserve Bank of India (RBI) and Bank Indonesia (BI) signed a Memorandum of Understanding (MoU) on Thursday, to establish a framework promoting the use of local currencies for cross-border transactions.
As per a press release by the Indian Embassy in Jakarta, the MoU, inked during the visit of a high-level delegation from BI to Mumbai, aims to enhance business ties between India and Indonesia by facilitating transactions in Indian Rupees (INR) and Indonesian Rupiahs (IDR).
The framework, the second of its kind for India with a foreign country after the UAE, encourages the use of INR and IDR in current account transactions, permissible capital account transactions, and other economic and financial dealings as agreed upon by both nations.
With bilateral trade between India and Indonesia reaching USD 40 billion in 2022, the MoU is expected to streamline trade processes, reduce settlement time and costs, and minimise foreign exchange volatility for exporters and importers.
The MoU lays the groundwork for more profound financial market integration, including opening the door for future payment system linkages.
This closer cooperation is set to benefit professionals working in each other’s countries, fostering an environment conducive to financial growth.
Additionally, it holds promise for about half a million Indian tourists who visit Indonesia annually.
