India and Mauritius Collaborate for Local Currency Trade

India and Mauritius have signed an MoU for local currency trade, establishing the INR-MUR Local Currency Settlement System to reduce reliance on hard currencies. The agreement aims to bolster bilateral trade and enable commercial banks to hold INR accounts in Mauritius, enhancing economic cooperation and growth.

The central banks of India and Mauritius have entered into a Memorandum of Understanding (MoU) to facilitate trade using local currencies. This agreement, signed on March 12, 2025, during Prime Minister Narendra Modi’s visit to Mauritius, aims to establish a framework for transactions in Indian Rupees (INR) and Mauritian Rupees (MUR).

The MoU will implement the INR-MUR Local Currency Settlement (LCS) System to diminish reliance on hard currencies for cross-border transactions. It is designed to aid in the development of exchange markets, enhance bilateral trade, settle investments, and foster economic growth between India and Mauritius.

Furthermore, the MoU outlines a cooperative effort to create an INR Clearing Centre in Mauritius, where commercial banks can maintain INR accounts through the Bank of Mauritius. This center will later expand to include the Common Market for Eastern and Southern Africa (COMESA) Regional Payment and Settlement System, increasing Mauritius’s role in INR clearing.

The leaders of both nations have endorsed the use of local currencies for trade settlements to mitigate risks in bilateral trading. The Reserve Bank of India has been proactive in facilitating such initiatives, allowing authorized Indian banks to establish Special Rupee Vostro Accounts for their international partners.

Since 2022, India has introduced arrangements for domestic currency transactions to bolster international trade, particularly exports. This strategy is part of India’s broader goal to enhance the international acceptance of the Indian Rupee, which is essential for its evolution into a global currency.

The recent MoU between India and Mauritius marks a significant step towards promoting trade in local currencies, enhancing bilateral relations, and reducing dependency on hard currencies. The establishment of an INR-MUR Local Currency Settlement System and an INR Clearing Centre in Mauritius is expected to facilitate smoother transactions and foster economic development in both nations.

Original Source: www.aninews.in