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

Bank Indonesia (BI) is not solely relying on foreign exchange reserves to manage pressure on the rupiah exchange rate, according to Senior Deputy Governor Destry Damayanti. Speaking at the ‘Investment Forum 2026’ at the Indonesia Stock Exchange in Jakarta, Destry said BI is also actively utilising a new policy instrument, the Local Currency Transaction (LCT), in various cross-border transactions, for instance with China and Japan. “BI facilitates spot CNY or Yen (JPY) against the rupiah. They (investors and traders from China and Japan) need Yuan and Yen exchange rates and can use domestic currencies,” Destry said on Wednesday, 15 July 2026. The LCT is a bilateral cross-border transaction settlement scheme using each country’s local currency. Its aim is to eliminate the need to convert currencies into US dollars (USD) first. Destry explained that Indonesia currently operates LCT arrangements with nine countries, including Malaysia, Thailand, Singapore, the Philippines, Vietnam, Laos, Brunei Darussalam, Japan, and South Korea. She stressed that LCT growth between Indonesia (rupiah) and China (yuan) and Japan (yen) has developed quite rapidly. “In fact, trade between Indonesia and China using LCT has already reached US$9 billion as of May 2026,” Destry stated. Destry confirmed that going forward, BI will continue to optimise the use of the LCT transaction mechanism to keep reducing demand for the US dollar. She added that such strategic measures will also continue to be promoted together with China’s central bank to deepen foreign exchange markets beyond the dollar. “And if we can continue to manage this, the impact could be very positive for the national economy,” she said.