India Promotes Local Currencies Framework With Maldives Amid Donald Trump's 'Dollar' Push

India and Maldives have now finalised a framework to increase the use of local currencies amid Donald Trump's 'dollar' push.

External Affairs Minister S Jaishankar asserted that India has always stood by the nation to promote cross-border trade between the two countries.

Jaishankar made these remarks earlier at a meeting with Abdulla Khaleel, Minister of Foreign Affairs of Maldives, in Delhi.

Khaleel arrived in Delhi on Thursday for a three-day visit with the objective to explore ways to bolster bilateral ties in several key areas such as maritime security, trade and investment.

"I see that the framework to promote the use of local currencies for cross border transaction has been signed," Jaishankar said.

"We have increased our engagement in various sectors and I do want to say that India has always stood by the Maldives. You are a very concrete expression of our neighbourhood first policy," he added.

One of India's key maritime neighbours in the Indian Ocean Region is the Maldives and the overall bilateral ties including in areas of defence and security witnessed an upward trajectory in the capital Male, under the previous government.

India's relationship with Maldives came under severe strain after Muizzu, known for his pro-China leanings, took charge of the top office in November 2023.

Muizzu had demanded, within hours of his oath, the withdrawal of Indian military personnel from his country and they were eventually replaced by civilians.

However, the ties softened as Muizzu vowed to boost the bilateral ties with India during his visit to Delhi in October.

Background

This decision has been taken by EAM Jaishankar as part of the Memorandum of Understanding (MoU) thaty was signed between RBI and the Maldives Monetary Authority (MMA) earlier in November.

The Reserve Bank of India had signed this MoU with MMA for establishing a framework to promote the use of local currencies, that is, the Indian Rupee and the Maldivian Rufiyaa (MVR) for cross-border transactions. The MoU was signed by Shaktikanta Das (former Governor of RBI) and Ahmed Munawar (Governor  of Maldives Monetary Authority).

This was done to enable exporters and importers to invoice and settle in their respective domestic currencies enabling the development of trading in the INR-MVR pair in the foreign exchange market.

Additionally, this move shall optimise costs as well as settlement time for transactions.

Donald Trump's ' Dollar ' Trumps!

On December 1, the US President-elect had threatened India along with other BRICS nations, with a 100 per cent tariff and had called for a clear commitment from these countries to refrain from creating a new currency or supporting any other currency to replace the US dollar.

Trump had also warned that any country trying to move away from the dollar will lose access to the US market, adding that such countries would need to find "another sucker" if they continued doing so.

India's Stance

In its latest bold move along with the Maldives, India is not seen succumbing to threats from the United States President-elect Donald Trump, as EAM S Jaishankar is seen strongly promoting the use of local currencies.