Bank of Mauritius and Reserve Bank of India sign MoU to establish INR-MUR local currency settlement and clearing framework

The Bank of Mauritius announced that it has signed and exchanged a Memorandum of Understanding with the Reserve Bank of India to establish a cooperation framework to use the Mauritian rupee (MUR) and Indian rupee (INR) for cross-border trade settlements between Mauritius and India. The arrangement is intended to culminate in an INR-MUR Local Currency Settlement (LCS) System aimed at reducing reliance on hard currencies for cross-border transactions. The LCS is intended to promote the use of INR and MUR for all current account transactions and permissible capital account transactions between the two countries, and to support the development of their respective foreign exchange markets. The MoU also provides for cooperation to create an INR Clearing Centre in Mauritius and to include INR as a settlement currency in the Mauritius Automated Clearing and Settlement System, enabling commercial banks to hold INR accounts at the Bank of Mauritius for INR transactions. The INR clearing centre is expected to be extended to the Common Market for Eastern and Southern Africa’s Regional Payment and Settlement System (COMESA), for which the Bank of Mauritius is the settlement bank, with INR proposed as an additional settlement currency. Bank of Mauritius Governor Dr Rama Krishna Sithanen said the framework and clearing centre are expected to support trade and investment between Mauritius and India while mitigating volatility and other foreign currency risks.