Indonesia has become the latest addition to a growing list of countries that have given up settling overseas trade in US dollar and instead have started using its local currency.

Indonesia is following the lead of BRICS in de-dollarization, the country’s central bank governor said.

The BRICS nations – Brazil, Russia, India, China, South Africa – have been ramping up de-dollarization efforts to use local currencies in settling international trade and reduce dependence on the US dollar. They are also working on creating a new currency to facilitate overseas trade.

The final agreement on this is expected to come up by August when the member countries meet for an annual summit in South Africa.

Indonesia gives up trade in dollar

Addressing a press conference after this month’s board of governors meeting, Bank of Indonesia Governor Perry Warjiyo said, “Indonesia has implemented the local currency trade (LCT) system.”

“Indonesia has initiated diversification of the use of currency in the form of LCT. The direction is the same as the BRICS. In fact, Indonesia is more concrete,” Warjiyo said.

Indonesia’s non-dollar trade

Indonesia has already started trading in its local currency with a host of countries including Thailand, Malaysia, China and Japan.

As per reports, the country is also expected to sign a cooperation agreement with South Korea next month.

BRICS nations dump dollar

Brazil and China have last month signed an agreement to abandon the US dollar as an intermediary and trade in their own currencies.

China’s attempts to ditch the dollar in international trade have gained momentum after sanctions were imposed by Western nations against Russia following its invasion of Ukraine.

As many as 18 countries have opened 60 special rupee vostro accounts to trade with India in Indian rupee. They are: Russia, Singapore, Sri Lanka, Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Seychelles, Tanzania, Uganda, United Kingdom.

Bangladesh became the latest country to finalise settling overseas trade with India in INR.

Interestingly, Russia began de-dollarizing its economy in 2014, when the West introduced the first round of sanctions against the country over Crimea.

Moscow has been increased the use of alternative currencies in transactions since last year, with President Vladimir Putin suggesting earlier that the Chinese yuan should be used more widely, not only in trade with China, but also in Russia’s transactions with countries in Africa and Latin America.

With inputs from agencies

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