Indonesia Considers Dollar Settlements for New Commodity Exchange

Indonesia is considering a significant change to its new commodity exchange, ICOMEX, by allowing trades to settle in US dollars alongside the rupiah. Sarjito, a supervisor at Indonesia’s Financial Services Authority (OJK), mentioned that officials are discussing this possibility with Bank Indonesia and other stakeholders. The settlement currency is crucial because ICOMEX aims to centralize the country’s commodity trading, making it easier for regulators to track transactions and potentially influence how export proceeds move through the financial system.

The debate extends to whether participation in ICOMEX will be mandatory or voluntary, particularly for commodities like tin and ferronickel. Sarjito initially suggested that exports and domestic sales might have to go through the exchange, but later clarified that the decision is still under consideration. Allowing dollar settlements could reduce the need for frequent currency conversions, simplifying transactions for exporters and domestic buyers.

ICOMEX is set to launch on January 4, 2027, and its rules could reshape USD/IDR cash flows. If dollar settlements are permitted, more transactions could be handled within the exchange through margin, collateral, and netting, rather than relying on banks and dealers. The market impact will depend on whether major exports are required to use the exchange, which could affect onshore dollar liquidity and rupiah volatility around settlement dates.