India and UAE agree trade settlement in local currencies
Bilateral trade between the two countries stood at Dh1.41 trillion over 10 years.
Abu Dhabi ( UAE Updates News – Arshad Farooq Butt )
Two Memoranda of Understanding (MoUs) have been exchanged in Abu Dhabi in the presence of Prime Minister Narendra Modi and UAE President Mohammed bin Zayed Al Nahyan.
The agreements aim to facilitate seamless cross-border transactions and payments and ensure greater economic cooperation between India and the United Arab Emirates (UAE).
The Reserve Bank of India (RBI) and the Central Bank of the UAE (CBUAE) have signed two MoUs to establish a framework to promote the use of local currencies. The objective is to establish a Local Currency Settlement System (LCSS) to promote the use of INR and AED bilaterally.
On this occasion, Prime Minister Narendra Modi has said that this is a very important aspect of India-UAE cooperation. It will pave the way for better economic cooperation and facilitate international financial interaction.
The MoU on trade in local currencies was signed by Reserve Bank of India Governor Shaktikanta Das and UAE Central Bank Governor Khaled Mohamed Balama.
The MoU also covers all current account transactions and permitted capital account transactions. The formation of LCSS will enable exporters and importers to invoice and make payments in their respective domestic currencies.
The arrangement will also promote investment and remittances between the two countries. Using local currencies will improve transaction costs and settlement time.