China and the Maldives on Friday signed an agreement to promote current account transaction settlement and direct investments in local currencies, according to an official statement.
The Maldives Economic Development and Trade Ministry announced that the government has signed a Memorandum of Understanding (MoU) with the People's Bank of China (PBoC).
"The MoU establishes a framework for cooperation aimed at promoting the settlement of current account transactions and direct investments in local currencies, facilitating smoother trade and investment relations between the two countries," the ministry said.
The latest development came after Maldives President Mohamed Muizzu visited China in January of this year.
The agreement is being hailed as a step toward stabilizing the Maldives' currency, which is under pressure due to dwindling foreign reserves.
It is the first of its kind pact signed by the Maldives.
"This framework agreement is expected to facilitate more efficient currency settlements in local currencies, enhancing convenience for traders engaged in imports from China and promoting increased cross-border investments between the two countries," the ministry statement added.
Mohamed Ameen, the island nation's transport and civil aviation minister, said on X that the pact will "encourage business and investment through local currency arrangements, relieving pressure on our market rate."
China remains one of Maldives' largest trade partners, with bilateral trade totaling approximately $700 million.
Additionally, China continues to be the largest source market for tourists to the Maldives.
"The MoU with PBoC, allowing local currency settlements strengthens our economic ties and opens doors for greater trade and investment," Maldivian parliamentarian Ahmed Azaan said on X.
Wang Lixin, China's ambassador to the Maldives, expressed optimism that the pact "will greatly facilitate trade, tourism and investment cooperation" between the two countries.
"Looking forward to more fruitful collaboration in the future," Wang stated on X.
