JAKARTA: Indonesia's central bank said on Monday it will allow transaction settlement for bilateral trade between Indonesia, Malaysia and Thailand to be conducted in local currencies.
The new regulation is aimed at reducing dependency on the US dollar and limiting exposure to volatile foreign exchange rates.
The rule, which goes into effect on Jan 2 next year, allows Indonesian exporters or importers to settle payments with their Malaysian or Thai counterparts using rupiah, ringgit or baht.
The three currencies are among the most volatile in the region.
Bank Indonesia, Bank of Thailand and Bank Negara Malaysia, will select banks that will be able to carry out such transactions, Indonesia's central bank said in a statement.