Indonesia and South Korea to Launch Local Currency Trade in 2024
Indonesia and South Korea Set to Launch Local Currency Trade in 2024
Indonesia and South Korea have entered into the final stages of establishing operational guidelines for a new local currency transactions (LCT) framework, scheduled to commence in 2024. This marks a significant milestone in the efforts to strengthen financial integration between the two nations. The initiative will facilitate direct trade transactions between the Indonesian Rupiah (IDR) and the South Korean Won (KRW), simplifying cross-border payments and mitigating foreign exchange risks associated with trade.
Memorandum of Understanding between Bank Indonesia and Bank of Korea
The LCT framework is a direct result of a memorandum of understanding signed in May by Bank Indonesia (BI) and the Bank of Korea (BOK). This agreement is poised to enhance economic stability within Asia’s financial landscape, reducing dependency on major currencies such as the US dollar for bilateral trade settlements.
Commitment to Economic Stability
Both central banks have expressed their unwavering commitment to this initiative, which is expected to bolster trade promotion, deepen financial markets, and stabilize regional economies. Banks will provide quotes for IDR-KRW currency pairs, thereby diminishing forex risk and costs associated with currency conversion.
Benefits and Endorsements
BI Governor Perry Warjiyo has emphasized the potential benefits of more efficient bilateral trade under the new framework, with BOK Governor Rhee Chang-yong also highlighting the contribution this collaboration will make toward macroeconomic resilience.
Conclusion
This strategic partnership between Indonesia and South Korea is set to revolutionize the landscape of local currency transactions, laying the groundwork for more seamless cross-border trade and economic stability in the region.
