"One of the ways in which this cooperation framework (works) is (it) allows exporters and importers to transact in local currency, which, in turn, will encourage the development of the foreign exchange markets of the two countries," said Erwin Haryono, head of the BI Communications Department, in Jakarta on Thursday.
He explained that the use of local currencies will reduce transaction costs and increase the efficiency of transaction completion times.
The MoU was signed by RBI Governor Shaktikanta Das and BI Governor Perry Warjiyo.
The MoU between the two central banks aims to encourage the use of local currencies — the rupee and rupiah — in bilateral transactions.
Haryono said that the collaboration marks an important achievement in strengthening bilateral financial cooperation between BI and RBI.
The wider use of local currencies for bilateral transactions is expected to help promote trade between Indonesia and India, deepen financial integration, and strengthen the historical, cultural, and economic ties that have existed between the two countries.
The cooperation will expand similar agreements forged by BI with Bank Negara Malaysia, Bank of Thailand, Japan Ministry of Finance, People's Bank of China, Monetary Authority of Singapore, and Bank of Korea.
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Translator: Martha Herlinawati Simanjuntak, Cindy Frishanti Oc
Editor: Anton Santoso
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