Hajj Seen to Weaken Rupiah, BI to Implement Local Currency Transactions with Saudi

Republika.co.id, Makassar – Bank Indonesia (BI) says one seasonal factor behind the rupiah’s current pressure is the high demand for US dollars during the Hajj season. In response, BI is pursuing cooperation to implement Local Currency Transactions (LCT) with Saudi Arabia.

“The Hajj season is still tied to the dollar. We want to change that; we want to have an LCT with Saudi Arabia,” said Ruth A. Cussoy Intama, Director of the Financial Market Deepening Department at BI, at a BI journalist training event titled ‘Strengthening FX Policy and Intermediation for Rupiah Stability and Credit Growth’ in Makassar, South Sulawesi, on Friday (22/5/2026).

Ruth said they are working to push through the idea of establishing LCT cooperation with Saudi Arabia. “That is what we are endeavouring to achieve,” she emphasised.

LCT is a settlement mechanism conducted bilaterally by Indonesian businesses and partner countries using the partner country’s currency through a bank-appointed Cross Currency Dealer (AACD).

The initiative to introduce LCT cooperation is part of a move to minimise Indonesia’s reliance on the US dollar. The use of the US dollar has already become structural in the economy, with export and import activities always involving a foreign currency.

Indonesia’s LCT implementation began in 2018. Initially, the programme saw cooperation with Malaysia and Thailand, later expanding to Japan, China, South Korea, and the UAE. In the meantime, LCT implementation with Singapore and India will proceed after the preparation and agreement on operational guidelines.