Jakarta, CNBC Indonesia – The relationship between Indonesia and China is getting more intimate, they are both willing to leave the United States (US) dollar in trading activities to investment or known as Local Currency Settlement (LCS).
“Currency exchange helps facilitate bilateral trade and investment in the midst of the global financial crisis,” said Central Bank of China Governor Yi Gang, in a webminar as part of a series of G20 meetings, Wednesday (16/2/2022).
The implementation of LCS cooperation is one of the central bank’s ongoing efforts to encourage wider use of local currencies in the settlement of trade transactions and direct investment with various partner countries.
The expansion of the use of the LCS is expected to support exchange rate stability through its impact on reducing dependence on certain currencies in the domestic foreign exchange market.
The value of RI and China transactions using LCS has reached up to US $ 15.1 million until October 21, 2021.
“LCS has reduced exchange risk and currency exchange fees, increased the efficiency of using local currencies and facilitated exchanges between currencies,” he added.
Furthermore, Gang said, the use of the renminbi in trade in goods increased by almost 5 percent.
“We appreciate the support from Bank Indonesia that has been given to UnionPay and the cooperation between the financial institutions of our two countries,” he said.
Going forward, China is ready to work closely with Indonesia and other Asian economies to promote the use of local currencies in regional trade and investment.
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