The Reserve Bank of India (RBI) has approved the use of Indian rupees and Maldivian rufiyaa for trade transactions between India and the Maldives, marking a significant step in enhancing bilateral economic ties.

In a circular issued yesterday, the RBI announced that trade between the two nations can now be conducted using their respective currencies, in addition to the existing Asian Clearing Union (ACU) mechanism.

The ACU facilitates financial transactions among member countries through their central banks, with participants including Bangladesh, Belarus, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka.

This development follows the Memorandum of Understanding (MoU) signed between the RBI and the Maldives Monetary Authority (MMA) in November 2024, which outlined the framework for direct currency transactions.

The Reserve Bank of India has confirmed that the agreement is effective immediately.