The UAE and India signed agreements for establishing a framework to promote the use of local currencies for cross-border transactions and cooperation for interlinking their payment and messaging systems.
The agreements were signed by Khaled Balama, Governor of the Central Bank of the UAE, and Shaktikanta Das, Governor of the Reserve Bank of India, in the presence of President Sheikh Mohamed and Indian Prime Minister Narendra Modi in Abu Dhabi on Saturday.
The agreement aims to put in place a local currency settlement system (LCSS) to promote the use of the Indian rupee and the dirham bilaterally, the RBI said in a statement on its website. “The agreement covers all current account transactions and permitted capital account transactions,” it said.
“Creation of the LCSS would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of an INR-AED foreign exchange market.”
India could make its first rupee payment for UAE oil to Abu Dhabi National Oil Company, Reuters reported on Friday. The two countries will also seek to link their payments messaging systems to facilitate bilateral financial messaging, the RBI said.
