The Reserve Bank of India (RBI) has approved the use of Indian Rupees (INR) and Maldivian Rufiyaa (MVR) in trade transactions between India and the Maldives. 

In a circular issued by the RBI, the bank stated that, in addition to the Asian Clearing Union (ACU) mechanism, bilateral trade transactions can now be conducted in INR and MVR. The ACU mechanism allows participating countries to settle financial transactions through their respective central banks. Alongside the Maldives, ACU members include Bangladesh, Belarus, Bhutan, India, Iran, Myanmar, Nepal, Pakistan, and Sri Lanka.

The approval follows a Memorandum of Understanding (MoU) signed between India and the Maldives in November last year. While the agreement laid the foundation for direct currency transactions, it had not yet been implemented until now. The RBI confirmed that the new framework takes effect immediately.

An official from the Federation of Indian Export Organisations (FIEO) welcomed the decision, stating that it would be a significant improvement for small businesses, helping to reduce operational costs and increase price predictability.

India is the primary exporter of essential commodities such as flour, sugar, and oil to the Maldives, and the shift to local currencies is expected to facilitate smoother payments and strengthen trade relations.

The initiative aligns with India’s broader strategy to reduce reliance on the US dollar in international transactions and promote the Indian Rupee as a preferred currency in the region.