Tuesday, September 26, 2023 | 13:01 WIB

Indonesia-South Korea agree to abandon US Dollar to strengthen bilateral ties

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Jakarta, IO – Indonesia and South Korea agreed to pursue the use of local currency in bilateral transactions between the two countries. The measure was taken to reduce the use of the US Dollar, reported Katadata, Tuesday (2/5).

The agreement was inked in the Memorandum of Understanding signed by Bank Indonesia (BI) Governor Perry Warjiyo and Bank of Korea Governor Rhee Chang-yong in South Korea today.

The use of the local currencies will be implemented in a number of activities such as current account transactions, direct investment, and other economic and financial transactions that will be agreed upon by authorities in both countries.

Indonesia and South Korea expected this agreement to help business players reduce transaction costs and minimize exchange rate risk in conducting bilateral transactions between the two countries. This can happen because transactions can be done using the Won-Rupiah exchange rate without the need to convert to US Dollar or other major currencies.

“This cooperation will continue to be strengthened through information sharing and regular discussions between Indonesian and South Korean authorities,” said an official statement from BI.

Read: Surabaya celebrates its 730th anniversary, holding plethora of events in May

Furthermore, BI and the Bank of Korea also view that this agreement can help promote trade between the two countries as well as deepen the financial markets in both countries.

In addition, BI and ASEAN countries have sought to immediately implement transactions using local currencies. This step is part of an effort to maintain exchange rate stability by reducing dependence on US Dollar. (un)

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