BI Boosts De-Dollarisation with New Incentives for Local Currency Transactions

Bank Indonesia (BI) has released an incentive policy for the use of Local Currency Transactions (LCT) with partner countries. This is provided to support the diversification of foreign exchange transactions while reducing dependence on the US dollar. The incentives offered by BI include a 10% increase in the premium for Buy Swap Hedging (Sell Swap Hedging to BI) and a 10% reduction in the premium for Sell DNDF Hedging. The provision of incentives aims to support increased foreign capital inflows through monetary operation instruments, namely: Bank Indonesia’s portfolio investment hedging sell swap and Bank Indonesia’s portfolio investment hedging sell DNDF. “This will not only encourage the use of LCT but also utilise it for the domestic foreign exchange market,” explained BI Governor Perry Warjiyo on Tuesday (22/7/2026). According to BI’s explanation, the provision of incentives to support the increase in Local Currency Transactions (LCT) with partner countries is carried out through monetary operation instruments, namely: Bank Indonesia’s hedging buy swap and Bank Indonesia’s hedging sell DNDF. “The provision of incentives in the form of a 10% premium increase for Bank Indonesia’s hedging buy swap transactions and a 10% premium reduction for Bank Indonesia’s hedging sell DNDF also aims to deepen the money market and foreign exchange market (PUVA),” wrote the explanation of the BI Board of Governors Meeting results. Furthermore, the expansion of local currency use in cross-border transactions is expected to increasingly contribute significantly to strengthening national macroeconomic stability, while mitigating exchange rate volatility risks stemming from global dynamics.