Singapore and Indonesia to launch Rupiah-SGD settlement framework

DBS, OCBC and UOB are Singapore's appointed dealers under the framework, which follows a 2022 MOU.

The Monetary Authority of Singapore (MAS) and Bank Indonesia (BI) are set to roll out a framework for the settlement of bilateral transactions between Indonesia and Singapore in their respective local currencies (LCT Framework).

MAS said that the framework will support bilateral trade and contribute to ASEAN financial integration efforts by promoting the wider use of local currencies in intra-ASEAN transactions.

The LCT Framework is seen to provide businesses and other users with greater flexibility in conducting transactions in the local currency pair, whilst reducing exchange rate risks and costs.

Its key features include the promotion of direct quotations between the Indonesian Rupiah and Singapore Dollar, as well as the implementation of relevant rules and regulations to enhance the usage of local currencies.

Under the framework, the Appointed Cross Currency Dealers (ACCDs) on each side will facilitate the settlement of current account transactions, transactions for direct investment, and cross-border payments in Indonesian Rupiah and Singapore Dollar.

Both central banks have already appointed banks as ACCDs.

In Singapore, the appointed banks are DBS Bank Ltd., Oversea-Chinese Banking Corporation Limited, and United Overseas Bank Limited. Their counterparts are PT Bank Central Asia Tbk, PT Bank CIMB Niaga Tbk, PT Bank DBS Indonesia, PT Bank Mandiri (Persero) Tbk, PT Bank Maybank Indonesia Tbk, PT Bank Negara Indonesia Tbk, PT Bank OCBC NISP Tbk, PT Bank Pembangunan Daerah Jawa Timur Tbk, and PT Bank UOB Indonesia.

This development follows the signing of a memorandum of understanding in August 2022 and an agreement on the Operational Guidelines for the framework in April 2026 by both central banks.