Key Highlights
- RBI Governor Sanjay Malhotra and BOM Governor Rama Krishna Sithanen formalised a bilateral MoU on 12 March 2025 in Port Louis.
- The pact authorises the Indian rupee and Mauritian rupee to be used for eligible cross‑border trade and select capital flows.
- Adoption of local currencies is projected to cut transaction expenses, accelerate settlement cycles and deepen monetary integration.
- It aligns with India’s broader ambition to elevate the rupee’s global footprint and supports regional financial cohesion in the Indian Ocean.
Detailed Insights
The memorandum, witnessed by Prime Ministers Narendra Modi and Navinchandra Ramgoolam, stipulates that exporters and importers from both economies may settle invoices directly in INR or MUR, bypassing third‑party currencies such as the US dollar. Coverage extends to all current‑account activities and to capital‑account movements expressly permitted by each central bank. Anticipated outcomes include lower foreign‑exchange costs, shortened payment timelines, and the emergence of a liquid INR‑MUR market that can serve as a catalyst for further economic collaboration.
Key Concepts
- Memorandum of Understanding (MoU): A non‑binding, written agreement that outlines mutual intentions and operational frameworks between two parties.
- Current‑account transaction: Trade‑related flows such as export‑import payments, services and unilateral transfers.
- Permissible capital‑account transaction: Select cross‑border investments or loans that both monetary authorities have approved.
- Currency internationalisation: The process of expanding a nation’s currency use beyond domestic borders for trade, investment and reserve holdings.