The Reserve Bank of India (RBI) has announced that bilateral trade transactions between India and the Maldives may now be settled in Indian Rupees (INR) and Maldivian Rufiyaa (MVR), in addition to the existing Asian Clearing Union (ACU) mechanism.
The move follows the signing of a Memorandum of Understanding (MoU) between the RBI and the Maldives Monetary Authority in November 2024. This agreement establishes a framework aimed at promoting the use of local currencies in trade settlements.
The ACU, a payment arrangement that allows participating central banks to settle intra-regional transactions on a net multilateral basis, includes members such as Bangladesh, Belarus, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka.
In a circular issued on Monday, the RBI confirmed that the new trade settlement mechanism has taken effect immediately.
This development is expected to provide greater flexibility for businesses in both countries, potentially simplifying trade processes and reducing dependency on third-party currencies.
