ER
NOT wanting to depend on the United States dollar (US), made a number of countries start dedollarizing. Previously, dedollarization was the process of replacing the dollar as the currency used for trade and bilateral agreements.
Until now, the US dollar was the main currency. The US dollar is commonly used as a reference for economic policy, as well as for agreements between countries. Recently, the BRICS trade organization has been talking about using a new currency in trade transactions.
The alliance of Brazil, Russia, India, China and South Africa expressed its intention to reduce transactions using the US dollar. One of them, to reduce costs and indeed to reduce dependence on the main currency.
Previously reported by kompas.com, a member of the Russian parliament Alexander Babakov revealed that further discussion would occur at the BRICS Summit in August 2023.
Bank Indonesia (BI) Governor Perry Warjiyo admitted that he had not heard the news about the alliance that created the new currency.
However, Perry suspects that the main decision of these countries is to diversify the use of currencies other than the dollar.
“I haven’t heard about it. However, indeed these countries aim to diversify the use of currencies with non-US dollars,” Perry explained in a press conference, earlier this week.
If this is the goal, this is actually nothing new. In fact, Indonesia is one of the countries that has diversified its currency. Namely, by using local currency settlement (LCS) in 2018 and now developing into local currency settlement (LCT).
“We are developing LCT for the settlement of trade transactions, investments, and even for payment systems. Indonesia (RI) has initiated it first,” he said.
On the same occasion, BI Senior Deputy Governor Destry Damayanti revealed that the average transaction using Indonesia’s LCT with partner countries is increasing every year. In the first two months of 2023, the total value of LCT transactions amounted to the equivalent of US$957 million.
“Or in other words, the average LCT usage per month in the first two months of this year was around US$450 million. Apart from the number of transactions, Destry also revealed that the number of LCT players until 2023 has reached 2,014 players,” she said.
She explained that this is an increase compared to the number of LCT players until 2022, which was only around 1,740 players. The use of local currencies in investment, trade, and financial transaction activities can increase the diversification of currency use.
Thus, the Rupiah will not be too dependent on major currencies, such as the United States (US) dollar. This will lead to a stronger Rupiah muscle, especially amid uncertain global pressures. [kontan.co.id/photo special]
