Singapore and Indonesia operationalise a local currency framework enabling bilateral trade, investment and payments in Singapore dollars and rupiah. The initiative aims to reduce exchange-rate risks and transaction costs while strengthening ASEAN financial integration.
Singapore and Indonesia have operationalised a Local Currency Transaction (LCT) Framework that allows businesses to settle bilateral transactions directly in the Singapore dollar and Indonesian rupiah. The initiative, launched by the Monetary Authority of Singapore (MAS) and Bank Indonesia (BI), aims to support trade, investment and wider use of local currencies within ASEAN.
Under the framework, appointed banks in both countries will facilitate transactions involving current-account activities, direct investment and cross-border payments using the two local currencies. The mechanism is expected to give businesses greater flexibility while reducing exposure to exchange-rate fluctuations and lowering transaction costs.
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The framework also promotes direct quotations between the rupiah and Singapore dollar, reducing the need for intermediary currencies such as the US dollar for eligible transactions. This could make cross-border payments more efficient for companies engaged in trade and investment between the two markets.
BI and MAS have appointed banks to facilitate the framework. Singaporean appointed cross-currency dealers include DBS Bank, OCBC and UOB, while Indonesian participants include banks such as Bank Central Asia, Bank Mandiri, Bank Negara Indonesia, CIMB Niaga, DBS Indonesia, Maybank Indonesia, OCBC NISP and UOB Indonesia.
The initiative builds on a Memorandum of Understanding signed in August 2022 between the two central banks. In April 2026, BI and MAS agreed on operational guidelines before putting the framework into effect. Indonesia also introduced domestic regulations in August to provide a structured basis for bilateral rupiah-Singapore dollar transactions through participating banks.
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Beyond bilateral trade, the arrangement supports the broader objective of ASEAN financial integration by encouraging greater use of regional currencies in cross-border transactions. Increasing local-currency settlement can help businesses reduce foreign-exchange exposure and strengthen regional financial connectivity.
The framework is therefore expected to benefit exporters, importers, investors and financial institutions by providing an additional settlement mechanism for transactions between Singapore and Indonesia. It also represents another step towards deeper financial cooperation and greater use of local currencies across Southeast Asia.