The Maldives Monetary Authority (MMA) and the Reserve Bank of India (RBI) have signed a Memorandum of Understanding (MoU) in Mumbai to promote the use of local currencies, the Maldivian Rufiyaa (MVR) and the Indian Rupee (INR), for cross-border transactions. Signed by MMA Governor Ahmed Munawar and RBI Governor Shaktikanta Das, the agreement aims to enhance trade and financial cooperation between the two countries.
The framework outlined in the MoU will allow businesses to invoice and settle transactions directly in their domestic currencies, eliminating the reliance on intermediary currencies such as the US Dollar. It will also facilitate trading of the MVR-INR currency pair in the foreign exchange market, reducing costs and improving settlement efficiency for both countries. The initiative covers current account transactions, specific capital account activities, and other mutually agreed financial exchanges.
This development is expected to strengthen economic ties between the Maldives and India, offering potential benefits for businesses and improving financial integration. For the Maldives, the shift to local currency trade could help optimise foreign exchange reserves and reduce exposure to exchange rate volatility, particularly for import-dependent sectors. For India, the agreement reflects its strategy to deepen financial relationships within the region while supporting its trading partners’ economic stability.
The move also highlights the increasing importance of regional cooperation in economic and financial strategies. By promoting local currency use, the initiative fosters resilience against global financial disruptions and provides a framework for more accessible trade. As the system is adopted, its implications for trade volume, economic resilience, and financial independence in both countries will be closely observed, with the potential to influence future regional agreements. This partnership signals a significant step towards deeper collaboration and shared economic growth.
