Not Using Dollars, Indonesia And South Korea Agree To Use Rupiah-Won Currency For Transactions

Rupiah (Photo: Antara)

JAKARTA - Bank Indonesia (BI), Bank of Korea (BOK), and the Ministry of Finance Korea have agreed on a Local Currency Transaction (LCT) cooperation framework in encouraging the use of local Rupiah-Won currency for trade transactions between Indonesia and South Korea.

Assistant Governor of the Communications Department Erwin Haryono said the move was a follow-up to the Memorandum of Understanding (MoU) which was signed in May 2023 and its operational framework agreement in June 2024.

"The LCT Indonesia-South Korea framework will be implemented effectively starting September 30, 2024," he explained in his statement, Friday, August 30.

Erwin conveyed that the implementation of the LCT framework between Indonesia and South Korea is an important achievement in bilateral financial cooperation between the two countries.

Meanwhile, the LCT framework will strengthen the interconnection of the Appointed Cross Currency Dealer (ACCD) bank in facilitating transactions running between countries using local currencies. This collaboration also encourages direct exchange rate quotation between Rupiah and Won as well as relaxation of the provisions needed to encourage the utilization of LCT.

In the future, Erwin said that the implementation of the LCT framework will encourage an increase in bilateral trade transactions, reduce exchange rate risk exposure, and increase transaction efficiency.

Therefore, BI and BOK have designated the following banks as ACCD banks in Indonesia and South Korea that will facilitate the operation of the Rupiah-Won LCT framework.

Bank ACCD Indonesia:

- PT Bank Mandiri (Persero) Tbk- PT Bank Negara Indonesia (Persero) Tbk- PT Bank Rakyat Indonesia (Persero) Tbk- PT Bank Central Asia Tbk- PT Bank CIMB Niaga Tbk- PT Bank BTPN Tbk- PT Bank Maybank Indonesia Tbk- PT Bank OCBC NISP Tbk- PT Bank DBS Indonesia- PT Bank Woori Saudara Indonesia 1906 Tbk- PT Bank KEB Hana Indonesia- PT Bank Shinhan Indonesia- PT Bank IBK Indonesia Tbk- PT Bank KB Bukopin Tbk

South Korean ACCD Bank:

- Woori Bank- KEB Hana Bank Seoul- Shinhan Bank Seoul- Industrial Bank of Korea- Kookmin Bank- SMBC Seoul- BNI Seoul Branch