Korea and Indonesia sign won-rupiah direct transaction agreement

Finance

Korea and Indonesia sign won-rupiah direct transaction agreement

Published: 02 May. 2023, 19:08 Updated: 03 May. 2023, 15:40

Bank of Korea Gov. Rhee Chang-yong, right, poses for a photo with his Indonesian counterpart, Perry Warjiyo, on the sidelines of Finance Ministers and Central Bank Governors Meeting in Songdo, west of Seoul, on Tuesday. [BANK OF KOREA]

The central banks of Korea and Indonesia agreed to promote currency exchanges in line with efforts to boost trade between the two countries.

The preliminary deal will lay out a framework for the won-rupiah transactions, according to the Bank of Korea.

Bank of Korea Gov. Rhee Chang-yong and his Indonesian counterpart, Perry Warjiyo, signed a memorandum of understanding (MOU) during the Finance Ministers and Central Bank Governors Meeting of Asean, plus its three Northeast Asian dialogue partners — Korea, China and Japan — in Songdo, Incheon.

Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam are Asean member states.

The MOU will help companies reduce their transaction costs and exposure to exchange rate risks by enabling the direct exchange rate quotations between the won and the rupiah in interbank trading.

Korea's central bank said that a more extensive use of local currencies in transactions will contribute to promoting trade between Indonesia and Korea.

BY SOHN DONG-JOO, YONHAP [sohn.dongjoo@joongang.co.kr]