Banggar Chairman Said Abdullah: Implementation Of LCT Is The Most Logical Way To Protect Rupiah

Chairman of the DPR Budget Agency (Banggar) Said Abdullah. (Photo: Doc. Antara)

Chairman of the DPR Budget Agency (Banggar) Said Abdullah assessed that the implementation of local currency transactions or Local Currency Transaction (LCT) is the most logical way to protect the rupiah.

"In my opinion, before there was a change in the global monetary system, the most logical choice to prevent the rupiah from continuing to be expressed is to use local currency transactions with many currencies," Said said in an official statement, quoted from Antara, Monday, August 28.

Said said that the rupiah is often appreciated in the long history of the country using the US dollar in international payments. Over the past year, continued Said, the rupiah tends to be corrected by 9.3 percent.

In fact, Indonesia's trade balance with the United States is often a surplus, so the rupiah should strengthen against the US dollar. However, due to the Federal Reserve's monetary policy which continues to maintain hawkish policies, many global currencies are under pressure against the US dollar, including the rupiah.

Therefore, reducing dependence on the US dollar or dedolarization can be a solution to reduce the risk of rupiah depreciation.

His statement continued the invitation of Bank Indonesia (BI) to other central banks in ASEAN to use the local currency use scheme in cross-border transactions in the region.

According to him, the use of the US dollar is sufficient for trade transactions with the United States. Meanwhile, transactions between countries in the region can use local currencies.

The implementation of the scheme can make ASEAN member countries reduce dependence on the US dollar, so that it can have positive implications for local currencies in the region, especially the rupiah.

"Our biggest trade image is ASEAN, so it makes a lot of sense if BI uses a lot of payment mechanisms. For us, in the ASEAN region, it's a good idea for BI not only to use payments, not US dollars, but also to think about regional payments in the ASEAN region," said Said.

The chairman of the House of Representatives Banggar supports BI to expand LCT's reach, including to the European Union. "It needs to be studied deeply by BI if we use common currencies such as euros such as EU member states," he said.