UAE, Indonesia sign agreement to promote local currencies for bilateral transactions
Agreement to facilitate the settlement of cross-border trade transactions in the two national currencies
The Central Bank of the UAE (CBUAE) and Bank Indonesia recently signed a Memorandum of Understanding (MoU) to support the steady growth of trade relations between the two countries through the establishment of a framework that promotes the use of local currencies for bilateral transactions. Khaled Mohamed Balama, Governor of CBUAE, and Perry Warjiyo, Governor of Bank Indonesia, signed the agreement.
From 2017 to 2023, non-oil trade doubled to more than AED16 billion between the UAE and Indonesia, setting the scene for continuous growth and collaboration in trade.
Framework for currency settlement
The partnership between CBUAE and Bank Indonesia defines a framework comprising various elements and measures to facilitate the settlement of cross-border trade transactions in the two national currencies. Moreover, it outlines the types of eligible transactions and allows for developing the conditions to support hedging and liquidity management activities in the UAE dirham and the Indonesian rupiah. This strengthens bilateral financial cooperation and will help businesses reduce transaction processing costs.
Under the agreement, CBUAE and Bank Indonesia will work closely to promote the use of their national currencies, supporting the gradual implementation of the framework. This collaborative effort not only aims to facilitate trade but also seeks to develop financial markets to foster economic growth and enhance financial stability in both countries.
Read: UAE’s ADNIC posts net profit of $30.4 million for Q1 2024
Supporting business opportunities in banking and finance
Governor Balama emphasized that the MoU with Bank Indonesia lays a strong foundation for future partnerships between the UAE and Indonesia, fostering greater opportunities in the banking and financial sector while bolstering trade and investment growth.
Similarly, Warjiyo highlighted the significance of cooperation in deepening financial integration and strengthening economic relations between the UAE and Indonesia. “Local currency transactions would further support financial stability and resilience, and deepen the financial market to address heightened external vulnerabilities,” he added.
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