Singapore, Indonesia operationalise local currency transaction framework

Singapore and Indonesia have successfully implemented a local currency transaction framework, enabling bilateral trade and intra-Asean transactions to be settled in their respective currencies, the rupiah and the Singapore dollar. The Monetary Authority of Singapore and Bank Indonesia jointly launched the framework, with appointed cross currency dealers facilitating current account transactions, direct investment transactions, and cross-border payments.

Prominent Indonesian banks, such as Bank Mandiri, Bank Central Asia, and Bank Negara Indonesia, along with Singapore’s DBS, OCBC, and UOB, were designated as cross currency dealers. Key features of the framework include direct quotations between the rupiah and Singapore dollar, and the implementation of rules and regulations to enhance the usage of local currencies.

The framework aims to provide businesses with greater flexibility in conducting transactions and reduce their exchange rate risks and costs.