South Korea and Indonesia Set to Initiate Local Currency Transactions in 2024

SEOUL - In a significant move to boost bilateral trade, the Bank of Korea (BOK) and Bank Indonesia have agreed to implement transactions using their local currencies, the Korean won and the Indonesian rupiah, starting in 2024. This agreement aims to streamline trade and investment processes between the two countries.

According to Yonhap News Agency, The foundation for this initiative was laid in May when the two banks signed a memorandum of understanding in Seoul. The memorandum outlined a framework for direct investment and other financial operations using the Korean won and the Indonesian rupiah. The agreement was formalized by BOK Governor Rhee Chang-yong and his Indonesian counterpart, Perry Warjiyo.

Sunday's accord marks a significant step forward in easing trade transactions between Indonesia and South Korea. It is expected to reduce the reliance on foreign exchange currencies, thereby minimizing exchange rate risks and associated costs for businesses and other stakeholders.

In a joint statement, the two central banks highlighted the potential benefits of this arrangement. "This will ultimately contribute to promoting trade between Indonesia and Korea, as well as deepening the financial markets in the local currencies in both countries," they said.

Governor Rhee emphasized the broader economic implications of the agreement, stating that the implementation of the local currency transaction framework would positively influence economic development. He noted that it would not only foster bilateral trade but also encourage the wider use of local currencies in both nations.

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