• The IMF acknowledges slow-moving trends in currency composition but has not received a specific proposal for a common BRICS currency.
• India and the UAE sign a deal to settle trade in Indian rupees, reflecting a focus on strengthening local currencies.

IMF Responds to BRICS Currency Proposal

The International Monetary Fund (IMF) has not received any specific proposal for a common BRICS currency. While slow-moving trends in currency composition and reserves have been observed, the IMF states that decisions regarding trade currencies are determined by the participating countries.

India and the UAE Foster Economic Cooperation

During a visit by Indian Prime Minister Narendra Modi to the UAE, a significant development in bilateral trade took place. The UAE signed a deal with India to settle trade in Indian rupees instead of U.S. dollars. This move reflects the growing focus on strengthening local currencies and reducing reliance on the U.S. dollar for trade transactions.

🇦🇪 UAE signs deal with India to settle trade in Indian rupees instead of US dollars. This decision highlights the growing focus on strengthening local currencies and reducing reliance on the U.S. dollar for bilateral trade. #IndiaUAETrade #StrengtheningLocalCurrencies

India-UAE MoUs for Cross-Border Transactions and Payment Systems

To enhance cross-border transactions and cooperation, the Reserve Bank of India (RBI) and the Central Bank of UAE (CBUAE) signed two Memorandums of Understanding (MoUs).

1. Local Currency Settlement System (LCSS) Framework: The first MoU aims to establish a framework for a Local Currency Settlement System (LCSS) that facilitates transactions in the Indian rupee (INR) and the UAE Dirham (AED). This system covers current account and permitted capital account transactions, promoting investments, remittances, and the development of an INR-AED foreign exchange market.
2. Payments and Messaging Systems Cooperation: The second MoU focuses on cooperation between the Fast Payment Systems (FPSs) of both countries, namely India’s Unified Payments Interface (UPI) and the UAE’s Instant Payment Platform (IPP). Additionally, the MoU explores the linking of their respective Card Switches (RuPay switch and UAESWITCH) and messaging systems (Structured Financial Messaging System of India and the UAE messaging system). These collaborations aim to enable fast, convenient, safe, and cost-effective cross-border funds transfers, mutual acceptance of domestic cards, and bilateral financial messaging.

Promoting Stronger Local Currencies and Economic Growth

The agreements signed between the RBI and the CBUAE reflect the commitment of India and the UAE to strengthen economic cooperation and promote the use of local currencies in cross-border transactions. Settling trade in Indian rupees fosters stronger local currencies, reduces dependence on the U.S. dollar, and optimizes transaction costs and settlement time. These initiatives are expected to support economic growth, investments, and remittances between the two countries.

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