Bank Indonesia (BI) with the Malaysian central bank, Bank Negara Malaysia and the central bank of Thailand, the Bank of Thailand, agreed on bilateral trade transactions using local currency. The agreement directly affects dependence on the United States dollar (US) currency.
BI has just issued a regulation on the settlement of bilateral trade transactions using local currency settlement through banks, as outlined in Bank Indonesia Regulation (PBI) No.19 / 11 / PBI / 2017.
"The Local Currency Settlement (LCS) arrangement aims to support the stability of the rupiah exchange rate, by reducing dependence on the use of US dollars in the settlement of bilateral trade transactions between Indonesia and partner countries," said an official BI statement, such as Monday (10/16/2017) )
Through this regulation, it is also expected to reduce foreign exchange transaction costs against the rupiah by directly quoting prices between rupiahs and partner currencies, so as to develop regional currency markets and expand access for businesses to pay their obligations in the eyes local money.
The issuance of the PBI is a follow-up to the signing of a Memorandum of Understanding between Bank Indonesia and Bank of Thailand and Bank Negara Malaysia on December 23, 2016, which agreed on the LCS cooperation between Indonesia, Malaysia and Thailand in the settlement of international trade between the three countries using the eyes local money (rupiah, ringgit, and baht).
PBI No.19 / 11 / PBI / 2017, among others, regulates the authority of BI together with the central bank of partner countries to appoint banks in Indonesia to carry out certain financial transactions and activities for the benefit of LCS, or also referred to as the Bank Appointed Cross Currency Dealer (ACCD Bank )
In relation to transactions, Indonesian importers who import goods from Malaysia or Thailand can pay using ringgit (MYR) or baht (THB) currency, through the designated ACCD Bank, without the need to pay in US dollars. Conversely, in the event that an Indonesian exporter wants to use the LCS mechanism, Indonesian exporters can also be paid in rupiah, MYR or THB through the designated ACCD Bank.