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India & Indonesia Ditch Dollar for Local Currencies
6 Jul
Summary
- Indonesia and India are establishing a local currency settlement framework.
- This mechanism aims to reduce transaction costs and reliance on the US dollar.
- Cooperation extends to critical minerals, steel, and digital technologies.
Indonesia and India are enhancing their financial relationship through a new local currency settlement (LCS) framework, as confirmed by a top diplomat. This agreement between Bank Indonesia and the Reserve Bank of India is designed to decrease dependence on the US dollar and cut transaction expenses for bilateral trade and investment.
The operational details of the LCS mechanism are currently being finalized by the central banks. Additionally, the countries are investigating the use of QR code linkages to simplify retail payments, particularly for tourists traveling between the two nations.
This financial cooperation aligns with a broader commitment to amplifying the voice of the Global South and supporting reforms for a more just global order. Indonesia views India as a key partner, respecting sovereignty and international law, aiming for a deeper ASEAN-India Comprehensive Strategic Partnership.
Future collaborations are targeted in sectors like maritime and air connectivity, critical minerals, rare earths, steel, downstream metals, pharmaceuticals, renewable energy, and digital technologies. Bilateral trade reached $28.16 billion in FY25, with significant potential for growth.
