The Reserve Bank of India (RBI) has announced that all eligible current account transactions including trade transactions with Sri Lanka may be settled in any permitted currency outside the Asian Clearing Union (ACU) mechanism until further notice.
The new system will come into force with immediate effect. Central banks and monetary authorities of Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are currently members of the ACU.
Asian Monetary Unit (AMU) is the common unit of account of ACU and is denominated as ‘ACU dollar,’ ‘ACU euro’ and ‘ACU yen,’ which is equivalent in value to one US dollar, one euro and one Japanese yen. All instruments of payments under ACU have to be denominated in AMUs. Settlement of these instruments is made by Category-I banks through the ACU dollar accounts, ACU euro accounts and ACU yen accounts, which should be distinct from the other US dollar, euro and Japanese yen accounts maintained for non-ACU transactions.
Headquartered in Tehran, Iran, the ACU was established on 9 December 1974 at the initiative of the United Nations Economic and Social Commission for Asia and Pacific (ESCAP), for promoting regional cooperation. Its objective is to facilitate payments among member countries for eligible transactions on a multilateral basis, thereby economising on the use of foreign exchange reserves and transfer costs, as well as promoting trade among the participating countries.
(The Indian Express)