Jakarta, CNBC Indonesia – Bank Indonesia (BI) is eyeing several countries to cooperate in the use of local currency or local currency settlement (LCS) in trade and investment transactions.
“In the future, there are 3 countries that will be explored for LCS cooperation, namely India, South Korea and the Philippines,” said Head of the BI Financial Market Development Department, Donny Hutabarat to CNBC Indonesia, Wednesday (3/8/2021).
With the LCS, the two countries that work together can reduce dependence on the United States (US) dollar. So that the two trading partners do not need to exchange US dollars first if they want to carry out trade and investment transactions.
Transactions through this LCS include the use of direct exchange rate quotes as well as interbank trading for the country’s currency and rupiah. In addition, there is also information sharing and regular discussions between authorities.
So far, Indonesia has run the LCS with Malaysia, Thailand, and Japan reaching US$ 117.3 million on average every month or equivalent to Rp 1.68 trillion (exchange rate of Rp. 14,400/US$). Indonesia has also agreed with China and it will be implemented this month.
“In early August 2021, there will be improvements to the rules for the Indonesia-Malaysia LCS and Indonesia-Japan LCS, as well as the implementation of the Indonesia-China LCS,” said Donny.
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