The Reserve Bank of India and Bank Indonesia (BI) on Thursday signed a Memorandum of Understanding to promote use of local currencies for bilateral transactions.

The MoU was signed here for establishing a framework to promote the use of local currencies viz., the Indian Rupee (INR) and the Indonesian Rupiah (IDR) for cross-border transactions, RBI said in a statement.

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.

"Use of local currencies would optimise costs and settlement time for transactions," RBI said.

The MoU was signed by RBI Governor Shaktikanta Das and Bank Indonesia Governor Perry Warjiyo.

"The MoU on establishing a framework for cooperation in the area of cross-border transactions in local currencies between India and Indonesia, aims to promote the use of INR and IDR bilaterally," RBI said.

The central bank further said the collaboration marks a key milestone in strengthening bilateral cooperation between RBI and BI.

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, it added.

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