Singapore and Indonesia launch local currency transaction framework to boost bilateral trade

Singapore and Indonesia have operationalised a framework enabling bilateral transactions between the two countries to be settled in their respective local currencies.

This initiative, jointly launched by the Monetary Authority of Singapore (MAS) and Bank Indonesia, would support bilateral trade and promote the wider use of local currencies in intra-ASEAN transactions.

Framework overview and key features

Appointed cross currency dealers on both sides will facilitate the settlement of current account transactions, direct investments, and cross-border payments in Indonesian rupiah and Singapore dollar.

In Singapore, the appointed dealers include DBS, OCBC, and UOB. On the Indonesian side, Bank Mandiri, Bank Central Asia, and Bank Negara Indonesia have been designated.

The framework is designed to provide businesses and other users with greater flexibility in conducting transactions in the rupiah-Singapore dollar currency pair, while reducing exchange rate risks and costs.

Key features include the promotion of direct quotations between the two currencies and the implementation of relevant rules and regulations to enhance local currency usage.

Industry perspectives

Kenneth Lai, Head of Global Markets at OCBC, highlighted the bank’s enhanced capability to facilitate direct conversions between the rupiah and the Singapore dollar for customers with business interests in Indonesia. He noted, “We hence expect more interest from our customers about such services, including hedging for this currency pair.”

Wee Ee Cheong, Deputy Chairman and Group CEO of UOB, said that the new framework will help the bank support clients in using local currencies for regional operations, boosting bilateral trade and enhancing financial integration in the region.

 

Li Zhen, Head of Foreign Exchange at DBS, stated that the bank’s role as an appointed cross currency dealer (ACCD) for the rupiah-Singapore dollar pair enhances its capabilities.

“This will provide corporates with better market access and more options when hedging foreign-exchange risk.” DBS and UOB have previously served as ACCDs for the Chinese offshore yuan-rupiah pair for several years.

This framework follows a memorandum of understanding signed in August 2022 and an agreement on operational guidelines finalised in April 2026 by both central banks.