Forging New Paths: Mauritius and India Ditch the Dollar for Trade

(3 Minutes Read)

Mauritius has signed a historic agreement with India to use Mauritian and Indian rupees in commercial transactions, aiming to reduce dependence on foreign currencies. This memorandum of understanding (MoU) establishes a local currency settlement system (LCS) for cross-border transactions, following a similar pact with China three years prior.

The initiative, highlighted by Bank of Mauritius Governor Rama Sithanen, seeks to bolster bilateral trade, direct investments, and economic stability while mitigating risks linked to foreign currency volatility. Local importers express concerns about securing foreign currency, particularly the scarce US dollar, but some view settling bills in rupees as beneficial.

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 While optimism exists about conducting transactions in local currencies, broader acceptance among trade partners remains uncertain. The MoU aligns with Mauritius’s past efforts to diminish dollar reliance, including a Renminbi Clearing Centre established in 2022. As economic tensions rise globally, this agreement could transform Mauritius’s trade dynamics, positioning it as a regional hub for local currency transactions.