US$3.2 Billion: Surging Local Currency Transactions Reported by Bank Indonesia

local currencies
local currencies (photo: Jason Leung - Unsplash)

Bank Indonesia (BI) has witnessed a momentous surge in local currency transactions (LCT) between nations, heralding a significant development in the economic landscape.

In a recent disclosure, Destry Damayanti, the esteemed Senior Deputy Governor of Bank Indonesia, revealed that the aggregate value of LCT transactions for the initial half of 2023 has reached an impressive milestone, soaring to a staggering US$3.2 billion.

The current figure exhibits a striking escalation when compared to the cumulative LCT transactions recorded throughout the entirety of 2022, which amounted to US$4.1 billion. Damayanti emphasized the undeniable positive trend, asserting, “The trajectory continues to exhibit steady growth, and as of June, we have already surpassed US$3.2 billion, a noteworthy contrast to the annual total of US$4.1 billion from the preceding year.”

Analyzing the LCT transactions according to participating countries, Damayanti shed light on Indonesia’s paramount role, as its transactions with Malaysia comprised a commanding US$1.2 billion, representing an impressive 38 percent share of the overall transactions. Following closely behind, the second-largest transactions involved Japan, accounting for 23 percent of the total, followed by Thailand, which contributed 20 percent to the overall volume.

“In the last position, we find China, as its economy is currently navigating through a phase of moderate deceleration,” Damayanti elucidated, underscoring the dynamic nature of economic interactions between nations.

On the business front, Damayanti imparted encouraging news, reporting that the number of businesses engaging in local currency transactions reached an all-time high by June 2023, totaling an impressive 2,014 entities. In comparison, during the same period in the previous year, only 1,741 businesses had participated in such transactions, clearly indicating a substantial uptick.

“We hold an optimistic outlook for further growth as we intensify our dissemination efforts and enhance awareness about the benefits of LCT among businesses,” she expressed.

Furthermore, BI’s unwavering commitment to fostering international partnerships led to a fruitful collaboration with South Korea in the domain of LCT. Presently, the implementation of LCT cooperation with South Korea is on the horizon, and BI is diligently preparing for the ensuing endeavors.

“Our current focus revolves around the seamless execution of this collaboration, which includes designating ACCD banks [appointed cross currency dealers] and launching an array of awareness campaigns to engage various stakeholders. We eagerly await Korea’s active participation,” Damayanti emphasized, underscoring the value of bilateral economic ties.

As LCT propels itself into the forefront of cross-border trade, the impact of this transformative approach transcends boundaries, promising mutual benefits and forging a pathway towards a more integrated and prosperous global economic landscape. The monumental strides achieved so far stand as a testament to the unwavering spirit of collaboration and progress, boding well for the enduring cooperation between nations and their shared pursuit of economic prosperity.