Rupee-Dirham deal

Two memoranda of understanding (MoU) were signed between the Reserve Bank of India and the Central Bank of the United Arab Emirates.

These MoUs will take India a step closer to increasing circulation of the rupee in the Gulf region.

The first agreement between the RBI and the UAE Central Bank will establish a framework to “promote the use of local currencies (rupee and dirham) for cross border transactions”.
The other MoU between the two central banks is aimed at interlinking their “payment and messaging systems”.
This will strengthen cooperation in the payment systems area by enabling integration between cross-border transactions between the UAE and India.
Such cooperation will also include the mutual acceptance of domestic card schemes by interlinking national card switches.
This will result in lowering transaction costs and making it easier to convert the currency.

India-UAE trade rose to $85 billion in 2022.
According to the External Affairs Ministry, UAE is India’s third-largest trading partner for 2022-23 and India’s second-largest export destination.
Bilateral trade has increased by approximately 15% since the entry into force of the CEPA on 1 May 2022.