“Japan and India will consider launching a local-currency settlement scheme that would enable direct yen-rupee transactions, bypassing the U.S. dollar, Nikkei has learned. The initiative is expected to reduce companies’ foreign-exchange and remittance costs.”
“Japan’s Ministry of Finance aims to sign a memorandum of cooperation with the Reserve Bank of India during fiscal 2026 to promote the use of local currencies in bilateral transactions.”
“Under the proposed framework, Japanese non-residents would be allowed to open accounts at Indian banks in India, enabling financial institutions in both countries to settle payments directly without using the U.S. dollar.”
“The arrangement would eliminate the need for dollar conversion, lowering foreign-exchange and transaction costs. It would also shorten settlement times by removing the need to route payments through third-country banks.”
“Japan concluded a similar local-currency settlement framework with Indonesia in 2019. Bilateral transactions under the arrangement reached the equivalent of $7.7 billion in 2025. Japan’s Ministry of Finance is also studying a comparable mechanism with Malaysia.”