India’s Finance Minister Nirmala Sitharaman and her Indonesian counterpart Sri Mulyani Indrawati at the Group of 20 finance ministers and central bank governors meeting in Gandhinagar, India, on July 16, 2023. - Bloomberg
NEW DELHI (Bloomberg): Indonesia and India are planning to settle bilateral transactions in local currencies and link up their fast payments systems to spur cross border fund transfers, according to a senior Indian government official.
India’s Finance Minister Nirmala Sitharaman and her Indonesian counterpart Sri Mulyani Indrawati discussed the proposals ahead of meetings among the Group of Twenty countries in India, said the official who asked not to be identified as the plans are not public. The talks are advanced and an announcement could come once officials complete formalities, the official added.
The proposed agreements with Indonesia comes as India inked similar pacts with the United Arab Emirates over the weekend, which will see more trades done in rupees and dirhams and allows for domestic credit cards in processing retail transactions.
India’s Finance Ministry spokesperson didn’t respond to a request for a comment. Bank Indonesia and the Finance Ministry in Jakarta also didn’t respond to a request for comment
The South Asian country has so far linked its fast payments system with Singapore, and is in talks with several others, including Japan and France, for such fast cross border transactions.
The moves are part of India’s push to internationalise the rupee and reduce its reliance on the US dollar. Success remains elusive with trade volumes below us$120 million since the Reserve Bank of India allowed more than a dozen banks to settle trade in rupees with 18 nations last year.
However, countries like Indonesia are still tying up with India given its fast-growing economy and hunger for food commodities. Sri Mulyani told Bloomberg in an interview that Indonesia wants to work with India to shield against the impact of China’s lacklustre performance.
