A bank employee counts Chinese yuan notes next to US dollar notes on Jan. 25, 2023, at a Kasikornbank branch in Bangkok. (Reuters/Athit Perawongmetha)
Indonesia and China are looking to become less reliant on the United States dollar by pushing ahead with the local currency transaction (LCT) scheme to conduct cross-border trade and investment using their own currencies.Bank Indonesia (BI) Governor Perry Warjiyo said on Thursday that the LCT between the two countries reached a total value of US$13 billion in the first four months of this year, pointing to a significant speed-up from $18 billion recorded for all of last year.
“Settling trade and investment transactions directly in rupiah and renminbi further reduces the need for the dollar,” Perry said in a press conference held after the monthly board of governors’ meeting.
Perry had a meeting with his Chinese counterpart, People’s Bank of China (PBOC) Governor Pan Gongsheng, in Shanghai on June 11, where the two explored the possibility of increasing a bilateral currency swap agreement (BCSA), according to a BI press statement released on the same day.
A BCSA is a contract between two central banks that allows them to exchange currencies up to a specified limit. It can serve various purposes, with one being to facilitate the implementation of an LTC scheme by ensuring both countries have access to each other’s currency for trade settlements.
