Temporarily rejected RCPT lowest numbered MX points to local host

When MTA (Mail Transport Agent) such as Sendmail and Exim attemps to relay and transmits email through the mail server while receiving mail from external address to local account, the mail will not get delivered and been rejected with the one or all of following errors in the maillog log file.

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2007-08-05 08:08:88 H=(example.com) [196.172.0.188] sender verify defer for : lowest numbered MX record points to local host
2007-08-05 08:08:88 H=(example.com) [196.172.0.188] F= temporarily rejected RCPT user@example.com: Could not complete sender verify
2007-08-05 08:08:88 H=mail.example.com [196.172.0.188] F= rejected RCPT : relay not permitted

The reason for the error message is the domain “example.com” is missing from the /etc/localdomains file of your server.
The difference between the /etc/localdomains and /etc/remotedomains files is that, they decide whether the email has to be delivered locally OR to a remote server respectively and is checked by the exim mail server.
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To fix the issue, edit the file:

# vim /etc/localdomains

and place the domain name entry there. There is no need to restart the ‘exim’