Which of the following statements are correct in respect of Agreement on use of Local Currencies for cross border transactions ? (1) India and UAE have signed a memorandum in this Agreement. (2) This agreement enables a frame work for trade settlements in their respective national currencies. (3) This Agreement was signed by the Prime Ministers of India and UAE (4) Peekay Intermark Ltd. And Reserve Bank of India were the First users of this system

Explanation

Statements 1 and 2 are correct Local Currency Settlement System (LCSS) Agreement India and the UAE signed a groundbreaking Memorandum of Understanding (MoU) to establish a Local Currency Settlement System (LCSS). This system allows trade settlement between the two nations in their respective national currencies – the Indian Rupee (INR) and the UAE Dirham (AED). This agreement covers all current account transactions and permitted capital account transactions. The primary goal of LCSS is to promote the use of INR and AED for cross-border transactions, allowing exporters and importers to invoice and pay in their domestic currencies. This simplifies transactions and reduces dependency on third-party currencies. MoU that was signed between the RBI Governor Shaktikanta Das and his counterpart at the Central Bank of UAE (CBUAE) Governor Khaled Mohamed Balama to promote the use of local currencies, the Indian Rupee (INR) and the UAE Dirham (AED), for cross-border transactions. Peekay Intermark Ltd. and YES BANK have become the first entities to settle a gold transaction in Indian Rupees under the newly set up Local Currency Settlement (LCS) system between India and the UAE.