Econ Ministry: Maldives-India currency agreement will boost cross-border investments

The Maldivian Economic Ministry has welcomed the Memorandum of Understanding (MoU signed last week regarding the use of local currencies for financial transactions between Maldives and India, saying that it will boost trade and cross-border investments.

The MoU on the use of local currencies was signed between the Maldives Monetary Authority (MMA) and the Reserve Bank of India (RBI) on Thursday.

The MoU encourages the use of INR and MVR in current account transactions, permissible capital account transactions and any other economic and financial transactions as agreed upon by both countries.

According to RBI, this framework would enable exporters and importers to invoice and settle in their respective domestic currencies, which in turn would enable the development of trading in INR-MVR pair in foreign exchange market.

The Maldivian Economic Ministry welcomed the agreement in a statement on Sunday.

“This bilateral agreement establishes a framework that facilitates current account transactions and direct investments in local currencies, strengthening trade and investment relations between the two countries,” said the ministry.

The singing of the agreement follows Maldivian President Dr. Mohamed Muizzu's official visit to India in October, during which he held discussions with Indian Prime Minister Narendra Modi focused on strengthening bilateral trade relations and expanding economic collaboration between Male’ and New Delhi.

The Economic Ministry said that the swift conclusion of the arrangement following the presidential visit demonstrates “the close relationship between the two nations.”

“The currency settlement framework will facilitate transactions in both countries' currencies, making it easier for Maldivian businesses to import from India and promoting increased cross-border investments,” said the ministry.

The ministry said that it will also provide significant conveniences for Indian tourists visiting the Maldives, as well as Maldivian citizens residing in India, in conducting business transactions and making payments for goods and services.

The ministry said that the initiative represents a significant step in President Muizzu’s policy of expanding the Maldivian economy and strengthening trade relations with key international partners.

According to the Economic Ministry, the annual trade volume between India and Maldives currently amounts to approximately USD 500 million.

The ministry said that the agreement marks an important milestone in further strengthening economic ties and boosting trade and investment flows between the two countries.