Business & Economy

De-Dollarisation: India, China Agree to Trade in Local Currency to Maldives, Media Reports

© Photo : taken from social media Screaming dollar
Screaming dollar - Sputnik India, 1920, 22.05.2024
International trade with India and China in national currency is a mutually beneficial mechanism that helps both countries save their foreign exchange reserves and also shift away from the dominant use of the US dollar.
The Maldives announced on Wednesday that India and China had reached a mutual agreement to pay for imports in their own currencies instead of the US dollar.
Indian news agency PTI reported that the move was expected to potentially save Male nearly 50 percent of its annual $1.5 million import bill from the two nations.
According to the report, Indian High Commissioner Munu Mahawar met with Maldivian Economic Development Minister Mohamed Saeed this month. He confirmed that New Delhi would provide support to Maldives in facilitating the settlement of import payments in Indian rupees.
Saeed also received a letter from China's Commerce Ministry. in which Beijing assured that it would allow the option of settling import payments in the Chinese yuan as requested by President Mohamed Muizzu.
Maldives imports $600 to £700 million in commodities from both India and China each year Saeed said, amounting to $1.4 billion to $1.5 billion in commodities annually from both markets combined.
“We are negotiating with both sides to make arrangements for us so that, for example, for imports from China, the shipping company can bring the invoice and the payment can be settled by converting Maldivian Rufiyaa to their local currency through the banks, instead of US dollar,” the minister noted.

“If we can arrange up to USD 300 million from each country, that means USD 700 million," Saeed said. "This means we can eliminate the reliance on US dollars by that amount in the future. That will reduce the demand for dollars. And the future demand for dollars will continue to fall.”

In July 2023, India announced that the Maldives was one of the 22 countries granted permission by the Reserve Bank of India to establish Special Rupee Vostro Accounts (SRVAs). That move was aimed at enhancing bilateral trade by facilitating transactions in local currencies.
India's External Affairs Minister Subrahmanyam Jaishankar walks out after the meeting of the Nepal-India joint commission in Kathmandu on January 4, 2024. - Sputnik India, 1920, 09.05.2024
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