India and Mauritius have signed an MoU to facilitate trade in local currencies, aiming to establish the INR-MUR Local Currency Settlement System to reduce reliance on hard currencies. The agreement, formalized during PM Modi’s visit to Mauritius, also seeks to create INR accounts at the Bank of Mauritius, thus enhancing bilateral trade and economic stability.
The central banks of India and Mauritius have forged a Memorandum of Understanding (MoU) to facilitate trade in local currencies, specifically the Indian Rupee (INR) and Mauritian Rupee (MUR). This agreement aims to establish a framework that promotes bilateral trade through the use of local currencies, which was formalized on March 12, 2025, during Prime Minister Narendra Modi’s state visit to Mauritius, alongside Prime Minister Navinchandra Ramgoolam.
The signed MoU encompasses the implementation of the INR-MUR Local Currency Settlement (LCS) System, designed to decrease reliance on hard currencies for cross-border transactions. The LCS will enhance both nations’ exchange markets, bolstering bilateral trade and investment, remittances, and overall economic stability. This initiative allows for the utilization of INR and MUR in current and permissible capital account transactions.
Additionally, the MoU stipulates cooperation to establish an INR Clearing Centre in Mauritius and to incorporate the INR as a settlement currency within the Mauritius Automated Clearing and Settlement System. Consequently, commercial banks will be able to maintain INR accounts at the Bank of Mauritius, facilitating INR transactions.
The INR Clearing Centre will be expanded to the Common Market for Eastern and Southern Africa’s Regional Payment and Settlement System (COMESA), thereby positioning Mauritius as a preferred jurisdiction for INR clearing on the continent. The agreement’s primary goal is to mitigate risks in bilateral trade through the settled exchanges in local currencies.
For some time, the Reserve Bank of India (RBI) has enabled trade using local currencies by permitting authorized Indian banks to open Special Rupee Vostro Accounts (SRVA) for correspondent banks in trading partner countries. Vostro accounts allow domestic banks to extend international banking services to their clients. The RBI’s arrangement, introduced in 2022, aimed to bolster global trade, particularly exports from India, and to promote international interest in the rupee.
India’s commitment to internationalizing the Indian Rupee underscores its ambition to position the currency as a globally accepted medium of exchange. Thus far, India has engaged in rupee-denominated trade with a limited number of countries while actively working towards expanding such arrangements with others.
The MoU between the central banks of India and Mauritius marks a significant step towards strengthening bilateral trade through the utilization of local currencies. By implementing the INR-MUR Local Currency Settlement System and establishing an INR Clearing Centre, both nations aim to enhance their trade capabilities while minimizing risks associated with currency fluctuations. India’s ongoing efforts to internationalize the Indian Rupee highlight its aspirations to integrate more extensively into global trade networks.
Original Source: www.aninews.in
