Bank of Korea to Promote Direct KRW-INR Currency Trading Next Year

Lee Chang-yong, Governor of the Bank of Korea, agreed on the 10th with Perry Warjiyo, Governor of Bank Indonesia, to work towards introducing a Local Currency Transaction (LCT) system between the two countries next year.

The Bank of Korea reported that Governor Lee met with Governor Warjiyo at Bank Indonesia on the same day and issued a joint statement containing this information.

In the statement, Governor Lee said, "Indonesia plays an important role in the global supply chain in advanced fields such as batteries and electric vehicles, based on its vast territory and large population," adding, "The introduction of an LCT system to promote the use of local currencies in trade settlements between the two countries will have a very positive impact not only on economic development through trade promotion but also on the expansion of local currency usage."

Lee Chang-yong, Governor of the Bank of Korea, answering questions from reporters at the Monetary Policy Direction press conference held at the Bank of Korea in Jung-gu, Seoul, on the 30th of last month.
[Image source=Yonhap News]

Governor Warjiyo stated, "Once the LCT system is introduced, cross-border transactions between Korea and Indonesia will be settled through local currency direct exchange rates provided by designated banks participating in the LCT system." He further added, "Encouraging the use of direct exchange rates of local currencies in trade settlements between the two countries will play a crucial role in improving transaction efficiency and strengthening macroeconomic stability."

This agreement follows the signing of a memorandum of understanding between the two central banks in May and the preparation of detailed operational guidelines to materialize it.

The Bank of Korea said, "It is expected that direct transactions between Korean won and Indonesian rupiah by private banks of both countries will reduce transaction costs for export and import companies and mitigate exchange rate risks, thereby promoting trade between the two countries."

This content was produced with the assistance of AI translation services.