KUALA LUMPUR: Trade between Indian and Malaysian businesses can now be conducted using the Indian Rupee (INR).
Indian High Commission in Kuala Lumpur, in a statement, said the decision was made by India's Ministry of External Affairs (MEA).
It said that besides the usage of INR in trade activities between both countries, the previous currencies used in bilateral trade were still applicable.
It said the new move followed a Reserve Bank of India's decision to allow the settlement of international trade in INR in July 2022.
"This mechanism will allow Indian and Malaysian traders to invoice trade in INR.
"Potential benefits include better pricing for traded goods and services, and the ability to directly trade in INR, therefore saving on currency conversion spreads.
"This mechanism is aligned with Malaysia's Foreign Exchange Policies (FEP) in which Malaysian banks are allowed to undertake settlements of international trade in goods and services in any foreign currency, subject to the rules and regulations of Bank Negara Malaysia," it said.
Furthermore, it added that the Reserve Bank of India's initiative aims to facilitate the growth of global trade and support the interests of the global trading community in INR.
It said the India International Bank of Malaysia (IIBM) will be the first bank in Malaysia to open a Special Rupee Vostro Account via its Corresponding Bank in India (Union Bank of India).
"India-Malaysia bilateral trade, which has reached US$19.4 billion (RM85.60 billion) in the financial year 2021 to 2022, is expected to benefit from this new option to settle bilateral trade in INR," it added.