ASEAN Edges Closer to Ditching USD with Indonesia-Singapore Local Currency Deal
The Monetary Authority of Singapore and Bank Indonesia have announced that they have operationalized their bilateral local currency transaction framework. This marks a significant step towards ASEAN's goal of moving away from the US dollar in trade.
The framework, which was established through a memorandum of understanding signed in 2022, allows for direct quotations between the Indonesian rupiah and Singapore dollar. It also includes rules and regulations to enhance the use of local currencies in transactions.
The central banks expect that this move will offer businesses greater flexibility in their transactions, while reducing exchange rate risks and costs. To facilitate local currency payments, they have selected 9 Indonesian banks and 3 Singaporean banks to participate in the framework.