Jakarta, CNBC Indonesia – Bank Indonesia (BI) announced that it has agreed to strengthen the cooperation framework for settlement of transactions with local currency or local currency settlement (LCS) with the Ministry of Finance of Japan, today Thursday (5/8/2021).
As is known, the Rupiah and Yen LCS transactions have been implemented since August 31, 2020. Through the strengthening of this cooperation framework, it shows that Indonesia and Japan are firmly committed to abandoning the dollar in trade and investment transactions.
In its official broadcast, BI explained that the strengthening of the framework for cooperation between BI and the Ministry of Finance of Japan was meant to relax foreign exchange transaction rules in the framework of settling bilateral transactions between the two countries, the rupiah and the yen.
Among other things, it includes the expansion of hedging instruments, implementation of hedging on the basis of trade and investment projections.
Then, increased transfer flexibility for IDR accounts in Japan, and increased transaction value thresholds without underlying documents up to US$ 500,000 per transaction.
“The strengthening of the cooperation framework, which will take effect on August 5, 2021, is part of ongoing efforts to encourage trade and investment as well as strengthen macroeconomic stability by encouraging wider use of local currencies for trade settlements and direct investment between Indonesia and Japan,” BI said in a statement. the official broadcast, Thursday (5/8/2021).
Furthermore, BI explained that the strengthening of the framework was in line with the Memorandum of Understanding signed by BI and JMOF on December 5, 2019.
The strategy for strengthening the LCS framework is part of the joint efforts of BI and JMOF in encouraging the wider use of local currency for businesses and individuals to facilitate and increase trade, direct investment, and other transaction activities such as remittances between Indonesia and Japan.
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