India and United Arab Emirates on Saturday signed agreements for the use of local currencies for bilateral trade and to set up a real-time payment link to facilitate easier cross-border money transfers.
The agreement will allow India to settle trade in rupees instead of dollars, boosting New Delhi’s efforts to cut transaction costs by eliminating dollar conversions.
The development came during a visit by India’s Prime Minister Narendra Modi to the UAE wherein the two countries also agreed to set up a real-time payment link to facilitate easier cross-border money transfers.
The two agreements will enable “seamless cross-border transactions and payments, and foster greater economic cooperation”, Reserve Bank of India said in a statement.
The MoU on establishing a framework for the use of local currencies for transactions between India and UAE, aims to put in place a Local Currency Settlement System (LCSS) to promote the use of INR and AED bilaterally, the statement added.
The Indian central bank said the agreement covers all current account transactions and permitted capital account transactions.—Agencies
