Maldives Monetary Authority (MMA) and the Reserve Bank of India (RBI) have signed an MoU on using local currencies in financial transactions between Maldives and India.

MMA Governor Ahmed Munawar and RBI Governor Shaktikanta Das signed the MoU.

MMA said the MoU encourages the use of Maldivian Rufiyaa and Indian Rupees in current account transactions, permitted capital account transactions and other economic and financial transactions as agreed between the two countries.

"This is an important decision that has further strengthened the relationship between the MMA and the RBI. The use of local currencies in financial transactions between the two countries will facilitate further expansion of bilateral trade and strengthen economic ties," the MMA said.

MMA further said businesses of the two countries will be billed in their own currencies for the import and export of goods and services.

Noting that the MoU opens the possibility of trading the two currencies in the foreign exchange market, MMA said this will reduce costs and speed up the time for settlement.