Photo: BNM

JAKARTA (TheInsiderStories)Bank Indonesia (BI) has issued technical regulations for the settlement of trade transactions between Indonesia with Malaysia (Ringgit) and Thailand (Baht). The ruling is aimed at reducing dependence on certain currencies while also maintaining exchange rate stability.

BI’s Spokesman Agusman explained how transactions using one another’s local currency can work to encourage bilateral trade between Indonesia, Thailand and Malaysia and reduce dependence on certain other currencies, in a Jakarta briefing on Monday (27/11).

“This will support the maintenance of exchange rate stability,” Agusman observed.

Bilateral trade without using the U.S dollar, the commonest global reserve currency, will be conducted through commercial banks designated as transaction-intermediary by Appointed Cross Currency Dealers (AACD) Bank.

Bank Indonesia and the authorities in Malaysia and Thailand will designate an AACD Bank, after confirming its rating. The authorized AACD Bank will be exempt from certain provisions and have more flexibility in conducting certain financial transactions and activities in the foreign exchange market.

According to Agusman, the rule is issued as a follow-up to the signing of an agreement between BI, Bank of Thailand and Bank Negara Malaysia on Dec. 23, 2016 on the South China Sea partnerships with both countries. Under the agreement, the settlement of international trade between the three countries can be done using rupiah, ringgit, and baht.

“The regulation will come into effect on January 2nd, 2018,” he announced.

Technical regulations concerning bilateral transactions are contained in the Governor’s Regulation No. 19/12/PADG/2017 on the Settlement of Bilateral Trade Transactions between Indonesia and Malaysia Using Rupiah and Ringgit through Banks.

Specific technical regulations governing the forging of bilateral transactions between Indonesia and Thailand are contained in the Regulation of Board of Governors Number 19/11/PADG/2017 on the Settlement of Bilateral Trade Transactions between Indonesia and Thailand Using Rupiah and Baht through Banks.

Written by Elisa Valenta, Email : elisa.valenta@theinsiderstories