MUMBAI (Reuters) - The Reserve Bank of India (RBI) on Thursday temporarily suspended all euro transactions through the Asian Clearing Union (ACU) mechanism from July 1 and said all such trades will now have to be settled outside the system until further notice.
The central bank did not specify a reason for this measure but said in a statement that it was taken as the payment channel for processing ACU euro transactions is "under review."
A trader told Reuters on Thursday the RBI was likely looking for a new correspondent bank to clear euro transactions through the ACU mechanism.
ACU is a common clearing mechanism for multilateral euro and dollar transactions for participating Asian central banks.
(Reporting by Suvashree Dey Choudhury; Editing by Sunil Nair)