Indonesia pushes local currency trade in ASEAN

Bank Indonesia (BI) has announced that it had continued expanding the use of local currencies in cross-border transactions with other member states of the Association of Southeast Asian Nations (ASEAN), reaching a value of $14.1 billion in the year to July, up 112% year-on-year.

BI Deputy Governor Filianingsih Hendarta said in a statement on September 18 that this initiative plays an important role in encouraging more efficient trade and investment flows. The initiative could also reduce the risk of exchange rate volatility and support financial market-deepening efforts.

With these various benefits, sustainable and inclusive ASEAN financial integration and economic growth can be achieved.

This figure, said BI, is equivalent to 87% of the total transactions throughout 2024, which reached $16.28 billion (equivalent). From the user perspective, the number of LCT customers will increase to an average of 7,568 per month in 2025, compared to 5,020 per month in 2024.

In the meantime, Bank of Thailand International Department director Nithiwadee Soontornpoch emphasized that the potential for increasing the use of local currency remains very large.

Bank Negara Malaysia Assistant Governor Mohamad Ali Iqbal Abdul Khalid stated that close collaboration between central banks has driven the trend of increasing use of local currencies in bilateral trade, which will become a catalyst for regional growth in the future.

BI began cooperation on the use of local currencies in 2016 by signing the MoU on Local Currency Settlement with Malaysia and Thailand. The initiative was officially implemented in 2018 and has since grown rapidly to include six partner countries.