BI: Indonesia-China Trade Reaches US$9 Billion via Local Currency Settlement

Bank Indonesia (BI), through its Senior Deputy Governor Destry Damayanti, has affirmed that it does not rely solely on foreign exchange reserves in its efforts to face pressure on the rupiah exchange rate.

Speaking at the ‘Investment Forum 2026’ held at the Indonesia Stock Exchange building in Jakarta, Destry said that BI is also actively utilising a new policy instrument, namely the Local Currency Transaction (LCT), in various cross-border transactions, for example with China and Japan.

“BI facilitates spot CNY or Yen (JPY) against the rupiah. They (investors and traders from China and Japan) need the Yuan and Yen exchange rate and can use domestic currency,” Destry said on Wednesday, 15 July 2026.

LCT is a scheme for settling bilateral cross-border transactions using each country’s local currency. Its purpose is to eliminate the need to convert currencies into US dollars (USD) first.

Destry explained that Indonesia has so far implemented LCT with nine countries, including Malaysia, Thailand, Singapore, the Philippines, Vietnam, Laos, Brunei Darussalam, Japan and South Korea.

She further stressed that LCT growth between Indonesia (rupiah) and China (Yuan) as well as Japan (Yen) has developed quite rapidly to date.

“In fact, trade between Indonesia and China using LCT has already reached US$9 billion as of May (2026),” Destry said.

Therefore, Destry affirmed that going forward BI will continue to optimise the use of the LCT transaction mechanism in order to keep reducing demand for the US dollar.

Moreover, Destry added that strategic steps such as these would continue to be promoted together with China’s central bank to deepen foreign exchange activity beyond the dollar.

“And if we can continue to manage this, the impact on the national economy could be very positive,” she said.