The agreement will allow exporters and importers to settle trade in the respective currencies, enabling the development of the Indonesian rupiah-Indian rupee foreign exchange market. The use of local currencies would optimise costs and settlement time for transactions, according to the release.
In October, India and Tanzania agreed on increasing the use of local currencies for trade. The two sides signed six agreements for cooperation in various sectors, including digital transformation, culture, sports, maritime industries and white-shipping information sharing.
In August, India and the United Arab Emirates executed the first crude-oil transaction using the local currency settlement system in an effort to boost economic ties by facilitating cross-border trade in local currencies.
Malaysia is another country with which India entered into a pact to settle trade in Indian rupees. The framework was operationalised last April, with India International Bank of Malaysia opening a special rupee vostro account with Union Bank of India.
Banks from Belarus, Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, the Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, Bangladesh, the Maldives, Kazakhstan and the UK have opened special rupee vostro accounts in Indian banks, according to the Ministry of External Affairs.
