REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia (BI) is intensifying efforts to expand the use of local currency transactions (LCT) in cross-border trade and investment across ASEAN. BI Deputy Governor Filianingsih Hendarta said the initiative plays a crucial role in enhancing trade efficiency, minimizing exchange rate volatility, and supporting the deepening of regional financial markets.

She noted, that this will pave the way for stronger financial integration and sustainable, inclusive economic growth in ASEAN.

The push for LCT is also echoed by other regional central banks. Bank of Thailand’s International Department Director, Nithiwadee Soontornpoch, emphasized that Thailand sees significant potential for expanding local currency use, given its large share of trade with ASEAN countries.

Similarly, Bank Negara Malaysia’s Assistant Governor, Mohamad Ali Iqbal Abdul Khalid, underlined that closer central bank cooperation has accelerated the adoption of local currencies in bilateral trade, which he said would become a catalyst for regional growth.

Data through July 2025 shows that LCT transactions reached the equivalent of US$14.1 billion, representing 112 percent year-on-year growth compared with US$6.7 billion in the same period last year. The figure already accounts for 87 percent of the total transactions recorded in 2024, which stood at US$16.28 billion.

The uptake is also reflected in rising user participation. The number of LCT customers averaged 7,568 per month in 2025, up from 5,020 in 2024.

Indonesia began fostering local currency cooperation in 2016 through a Local Currency Settlement (LCS) memorandum of understanding with Malaysia and Thailand, which was officially implemented in 2018. The framework has since expanded to six partner countries.

To further enhance consistency, BI, Bank Negara Malaysia, and Bank of Thailand have agreed to harmonize LCT operational guidelines, creating a regional benchmark that standardizes procedures, improves transparency, and facilitates cross-border negotiations.

According to BI, broader use of local currencies will help strengthen national macroeconomic resilience and reduce vulnerabilities to global currency fluctuations.

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