India and Mauritius have signed an MoU to trade using local currencies, specifically the Indian Rupee (INR) and Mauritian Rupee (MUR). This agreement aims to implement a Local Currency Settlement System to reduce reliance on hard currencies for trade, enhance bilateral economic ties, and promote the INR’s internationalization. Moreover, an INR Clearing Centre will be established in Mauritius to facilitate transactions in INR.
The Reserve Banks of India and Mauritius have signed a Memorandum of Understanding (MoU) to facilitate trade using local currencies. The agreement aims to establish a framework for promoting trade in Indian Rupees (INR) and Mauritian Rupees (MUR), thereby reducing reliance on hard currencies for cross-border transactions. This significant development was confirmed in a statement by RBI following a state visit by Prime Minister Narendra Modi to Mauritius on March 12, 2025.
The MoU is set to implement the INR-MUR Local Currency Settlement (LCS) System, which will aid in the development of exchange markets in both nations. This system is expected to enhance bilateral trade, settlement, remittances, and ultimately economic growth. Both currencies will be utilized for all current account transactions and permissible capital account transactions.
Additionally, the MoU outlines cooperation for establishing an INR Clearing Centre in Mauritius. This centre will allow commercial banks to maintain INR accounts at the Bank of Mauritius, facilitating transactions in Indian Rupees. Furthermore, this initiative aims to position Mauritius as a key jurisdiction for INR clearing and settlement in the Common Market for Eastern and Southern Africa (COMESA) region.
The agreement underscores the commitment of both nations to mitigate risks associated with bilateral trade by promoting local currency transactions. The Reserve Bank of India has previously authorized banks to open Special Rupee Vostro Accounts (SRVA) for trading with local currencies, thereby supporting the internationalization of the Indian Rupee.
Since 2022, the Reserve Bank of India has implemented various measures to promote the use of domestic currencies in trade, aiming to expand India’s global trade footprint and elevate the status of the Indian Rupee in international markets. Currently, India conducts rupee-denominated trade with a few countries and continues to explore further opportunities on a global scale.
The MoU between India and Mauritius aims to bolster bilateral trade by facilitating transactions in local currencies, thus reducing dependence on hard currencies. The establishment of the INR-MUR Local Currency Settlement System and the INR Clearing Centre in Mauritius signifies an important step toward integrating the Indian Rupee into international trade. This cooperative effort is expected to enhance economic growth, support financial market development, and promote the Indian Rupee as a more accepted global currency.
Original Source: www.aninews.in
