RBI and Bank Indonesia Ink MoU for Bilateral Local Currency Transactions

Current Context: The Reserve Bank of India (RBI) and Bank Indonesia (BI) signed a Memorandum of Understanding (MoU) on March 7, 2024, in Mumbai, India to establish a framework for promoting the use of local currencies, the Indian Rupee (INR) and the Indonesian Rupiah (IDR), for cross-border transactions.

• The MoU aims to promote the use of INR and IDR bilaterally.
• It covers all current account transactions, permissible capital account transactions, and any other economic and financial transactions as agreed upon by both countries.
• This framework would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of an INR-IDR foreign exchange market.
• The use of local currencies in bilateral transactions will eventually contribute to promoting trade between India and Indonesia as well as deepen financial integration and strengthen the long historical, cultural, and economic relations between India and Indonesia.
• The MoU was signed by the Governor of the Reserve Bank of India, Shri Shaktikanta Das, and the Governor of Bank Indonesia, Mr. Perry Warjiyo.

Question:

Q.1 What is the main aim of the RBI and Bank Indonesia MoU?
a. To promote the use of USD and EUR bilaterally
b. To promote the use of INR and IDR bilaterally
c. To promote the use of INR and USD bilaterally
d. To promote the use of IDR and EUR bilaterally