According to Indonesia’s central bank, the country is following in the footsteps of the BRICS nations and moving away from using the US dollar in trade and financial transactions. Bank of Indonesia Governor Perry Warjiyo announced that the country has started using its local currency to settle cross-border trades. Warjiyo also noted that Indonesia has already implemented this practice with several countries, including Thailand, Malaysia, China, and Japan, and plans to sign a cooperation agreement with South Korea regarding local currency trading in early May.
This move towards local currency trading comes as the BRICS bloc, consisting of Brazil, Russia, India, China, and South Africa, is developing a joint payment network to reduce reliance on the Western financial system, especially the US dollar. These countries have been increasing the use of their own currencies in mutual trade and working on establishing a new reserve currency. Brazil and China recently signed an agreement to trade in their own currencies, bypassing the use of the greenback as an intermediary.
Russia, a major global energy producer and exporter, has been de-dollarizing its economy since 2014, when the West first imposed sanctions on the country over Crimea. Moscow has been increasing the use of alternative currencies in transactions since last year. In addition, Russian President Vladimir Putin has suggested 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. The Bank of Russia’s latest data shows that the yuan has become a major player in Russia’s foreign trade.