Indonesia, South Korea collaborate to boost local currency trade

JAKARTA, Dec 11 (Bernama) -- Bank Indonesia and the Bank of Korea have agreed to establish operational guidelines for the local currency transactions framework, scheduled to be operationalised next year.

In a joint statement, the central banks stated that this initiative follows the signing of a memorandum of understanding on a cooperation framework to promote bilateral transactions in local currency in May this year.

The framework will facilitate the settlement of trade transactions between Indonesia and South Korea in their local currencies, reducing exposure to exchange rate risks and costs for businesses and other users.

Banks in both countries will quote the local currency pair, enabling businesses and other users to reduce their exposure to exchange rate risks and costs associated with bilateral transactions.

“This will ultimately contribute to promoting trade and deepening the financial markets in local currencies in both countries,” according to the central banks.

Bank Indonesia and the Bank of Korea have also expressed a strong commitment to implementing the local currency transactions framework to strengthen cross-border trade, enhance regional financial market stability, and deepen the local currency market in both countries.

This initiative aligns with the financial integration efforts of countries in the region to facilitate the wider use of local currencies, the central banks said.

-- BERNAMA