The Jakarta Globe reported that last year, the Bank of Indonesia and the Reserve Bank of India signed a memorandum of understanding (MoU) on domestic currency payments. The deal would allow exporters and importers to pay in Indonesian rupiah or Indian rupees, thereby eliminating the need for the US dollar as an intermediary.
Late last month, Indian Prime Minister Narendra Modi welcomed Indonesian President Prabowo Subianto during his first state visit to New Delhi. A joint statement issued after the meeting mentioned the use of local currencies in bilateral trade.
"Both leaders emphasized the importance of quickly implementing the use of local currencies. The two sides expressed their confidence that the use of domestic currency in bilateral transactions will further promote trade between Indonesia and India, while further deepening financial integration between the two economies" - a joint statement released by the Indonesian Foreign Ministry in a written section.
The bilateral meeting also mentioned Indonesia's entry into BRICS - a group of emerging economies known for their de-dollarization efforts. BRICS includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, the United Arab Emirates (UAE) and recently Indonesia.
India welcomes Jakarta's BRICS membership. Meanwhile, Indonesia believes that its membership in BRICS can further strengthen the bloc's solidarity.
Currently, Indonesia has used domestic currency in bilateral transactions with China, Japan, Malaysia and Thailand. Russian Ambassador to Indonesia Sergei Tolchenov recently revealed that BRICS founder Russia has negotiated to reach an agreement on domestic currency transactions with Jakarta.
The trade turnover between India and Indonesia reached a total of 24.1 billion USD from January to November 2024. Indonesia exports more than it imports from India, with a surplus of nearly 13.7 billion USD.
ASEAN - of which Indonesia is a member - is trying to complete the review of a free trade agreement with India this year. This upgraded ASEAN - India Commodity Trade Agreement (AITIGA) is expected to create more favorable conditions for businesses.
