India agrees with UAE to settle trade in rupees

India signed an agreement with the United Arab Emirates on Saturday that will allow it to settle trade in rupees instead of dollars during a one-day visit to Abu Dhabi by India’s Prime Minister Narendra Modi.

Modi was hosted by UAE President Sheikh Mohamed bin Zayed Al Nahyan at Qasr Al Watan Palace in Abu Dhabi.

The deal will boost India’s efforts to cut transaction costs by eliminating dollar conversions. The two countries also agreed to set up a real-time payment link to facilitate easier cross-border money transfers.

The Reserve Bank of India said the two central banks agreed to link India’s Unified Payments Interface (UPI) and UAE’s Instant Payment Platform (IPP).

Such arrangements, which are a growing trend in Asia, typically lower the cost of payments.