India and Mauritius have signed a Memorandum of Understanding (MoU) to facilitate trade using local currencies, INR and MUR, aiming to reduce reliance on foreign currencies. The agreement outlines the establishment of the INR-MUR Local Currency Settlement System, enhancing bilateral trade and investment. The initiative includes creating an INR Clearing Centre in Mauritius, promoting economic cooperation between the two nations.
On March 12, 2025, the central banks of India and Mauritius signed a Memorandum of Understanding (MoU) to facilitate trade using local currencies. This agreement aims to establish a framework that promotes transactions in the Indian Rupee (INR) and Mauritian Rupee (MUR), reducing reliance on foreign currencies for trade. Prime Ministers Narendra Modi of India and Navinchandra Ramgoolam of Mauritius officiated the document exchange during PM Modi’s state visit to Mauritius.
The MoU introduces the INR-MUR Local Currency Settlement (LCS) System, which is designed to enhance bilateral trade, direct investment, remittances, and financial market development, contributing to overall economic growth and stability. The arrangement encourages the use of INR and MUR for all current account transactions and permissible capital account transactions between the two nations.
Furthermore, the agreement includes provisions to establish an INR Clearing Centre in Mauritius, enabling commercial banks to maintain INR accounts at the Bank of Mauritius. This facility aims to streamline transactions in INR and will subsequently be extended to the Common Market for Eastern and Southern Africa’s Regional Payment and Settlement System (COMESA).
The leaders of both countries believe that utilizing local currencies will mitigate risks in bilateral trade. The Reserve Bank of India has previously enabled trade in local currencies through Special Rupee Vostro Accounts (SRVA), which allow Indian banks to facilitate international transactions for authorized banks from partner countries.
In 2022, the Reserve Bank of India initiated arrangements for domestic currency transactions to foster global trade, particularly emphasizing Indian exports and enhancing demand for the rupee. India’s ongoing efforts aim to position the Indian Rupee as a feasible global currency for international trade settlements.
The recent MoU between India and Mauritius establishes a significant milestone in bilateral trade by promoting the use of local currencies. This initiative not only aims to reduce dependency on hard currencies but also encourages economic cooperation and integration within the region. By facilitating transactions in INR and MUR, both countries anticipate enhanced stability, bilateral trade growth, and the internationalization of the Indian Rupee, strengthening India’s position in global trade dynamics.
Original Source: www.aninews.in
