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Indonesia, India to strike a local currency settlement
Indonesia and India are discussing a proposal to settle bilateral transactions with local currencies and link the fast payment systems of both countries, according to Bloomberg.
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Sri Mulyani Indrawati speaking at the G20 Tax Symposium on Thursday, July 14, 2022, in Bali. (Finance Ministry/Biro KLI)
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inance Minister Sri Mulyani Indrawati and her Indian counterpart, Nirmala Sitharaman, discussed a proposal to settle bilateral transactions with local currencies and link the fast payment systems of both countries, according to a report from Bloomberg.
According to Bloomberg, the talks have reached an advanced stage and an announcement could come once officials complete formalities. However, Bank Indonesia, the Finance Ministry in Jakarta and India’s Finance Ministry did not respond to Bloomberg’s request for comment.
India is one of Indonesia's top non-oil and gas export destinations with a US$9.4 billion transaction value during the first half of this year, which is dominated by mineral fuel, crude palm oil (CPO) and steel commodities. Meanwhile, the value of Indonesia's non-oil and gas imports during the same period is about $3.3 billion.
Read also: Defying the dollar: ASEAN pushes for greater local currency use
On the other hand, Indonesia and other countries in Southeast Asia have declared a collective effort to use their own currencies more often in intra-regional trade.
The deal, which was announced at the ASEAN Summit in May, also encouraged country members to settle transactions in local currencies rather than with the US dollar, in order to insulate the region from external volatility.
Among ASEAN countries, Indonesia, Thailand, Malaysia and the Philippines have been developing their capacity for local currency settlement (LCS) since 2017.
