The Reserve Bank of India, India’s central bank, has granted permission for trade transactions between India and the Maldives to be conducted using both countries’ currencies. In a circular issued yesterday, the Reserve Bank of India stated that in addition to the ACU mechanism, the Maldivian Rufiyaa and Indian Rupee can be used for bilateral financial transactions between India and the Maldives. The ACU mechanism is a system for conducting financial transactions among member countries of the Asian Clearing Union (ACU). Besides the Maldives, ACU members include Bangladesh, Bhutan, India, Iran, Myanmar, Nepal, Pakistan, and Sri Lanka.
The Reserve Bank of India has granted this permission for using both countries’ currencies in financial transactions between India and the Maldives following a memorandum of understanding signed between the two countries last November. The Indian central bank stated that this decision can be implemented with immediate effect. As India is the main exporter of essential goods such as rice, sugar, and oil to the Maldives, this decision will facilitate easier payments and enhance trade stability.
India has been working to reduce the use of dollars in financial transactions. This is part of India’s vision to increase the popularity of the Indian Rupee. During President Dr. Mohamed Muizzu’s official visit to India, following consultations with Indian Prime Minister Narendra Modi Minister Narendra Modi, arrangements were made to allow the use of Indian RuPay cards in the Maldives as part of the agreements exchanged between the two countries.
