Bank of Korea and Ministry of Economy and Finance Launch Local Currency Direct Transaction System with Bank Indonesia

The Bank of Korea and the Ministry of Economy and Finance announced on the 30th that they will implement a local currency transaction (LCT) system between the central banks of Korea and Indonesia starting from the 30th of next month.

This is a follow-up measure following the signing of a memorandum of understanding in May and the agreement on detailed operational guidelines in June this year.

With the introduction of the LCT system, cross-border transactions between Korea and Indonesia will be conducted through the KRW-IDR exchange rates provided by designated banks participating in both countries. Export and import companies in both countries will be able to trade in Korean won or Indonesian rupiah, reducing exposure to exchange rate risks.

Both sides expect that in the future, transaction costs for export and import companies will be reduced, trade between the two countries will be promoted, and financial cooperation will be strengthened.

The Bank of Korea and the Bank Indonesia have each selected local currency transaction banks to participate in the local currency transaction system, and local currency transactions through these banks will be possible from the 30th of next month.