Bank Indonesia (BI) is set to broaden its monetary operations by incorporating foreign currency (forex) instruments, specifically spot and swap transactions, denominated in the Chinese Yuan (CNY) and Japanese Yen (JPY). This strategic move aims to fortify the stability of the Indonesian rupiah’s exchange rate and deepen the domestic forex market, fostering greater resilience.
According to Destry Damayanti, Senior Deputy Governor of Bank Indonesia, the introduction of these new monetary instruments is a direct response to the escalating demand for both the Chinese Yuan and Japanese Yen. A significant driver behind this increased demand is the continuous growth in Local Currency Transactions (LCT) between Indonesia and China, signaling a shift in regional trade dynamics.
Highlighting the scale of these transactions, Destry revealed during a statement in Jakarta on Wednesday, November 19, 2025, that LCT with China can now reach up to US$1 billion (equivalent to Rp 16.73 trillion) within a single month. She noted that previously, banks often faced challenges in sourcing Renminbi or Chinese Yuan to meet this burgeoning demand.
The central bank anticipates that this expansion of monetary instruments will significantly alleviate pressure stemming from the US dollar, which has historically dominated international transactions. Further underscoring the success of the LCT framework, BI data indicates that Local Currency Transactions witnessed an impressive 1.6-fold increase by October 2025 compared to the same period in the previous year.
“The number of participants involved in LCT has also surged, now reaching 15,473, a substantial rise from just 5,053 participants recorded in 2024,” Destry added, illustrating the rapid adoption and growing importance of these local currency frameworks.
Rupiah Still Under Pressure
Despite these proactive measures, Bank Indonesia concurrently acknowledged that the rupiah’s exchange rate remains under considerable pressure. Governor Perry Warjiyo announced that as of November 18, 2025, the rupiah stood at Rp 16,735 per US dollar, reflecting a 0.69% depreciation since the end of October 2025.
This weakening trend in the rupiah mirrors the broader movements observed across various regional currencies and those of Indonesia’s key trading partners. To staunch this depreciation and uphold the stability of the rupiah’s exchange rate, Perry confirmed that Bank Indonesia has implemented a series of robust intervention strategies.
Elaborating on these interventions, Perry detailed that Bank Indonesia’s stabilization efforts involve direct interventions in both the spot market and the Non-Deliverable Forward (NDF) market, spanning both offshore and onshore segments (known as DNDF). Furthermore, BI is actively engaged in purchasing Government Securities (SBN) in the secondary market to manage liquidity and support the currency.
Complementing these direct interventions, there has been a notable increase in the conversion of foreign exchange into rupiah by exporters, a direct outcome of the reinforced Natural Resources Export Proceeds (DHE SDA) policy. This, coupled with an additional supply of foreign currency from corporations, collectively contributes to maintaining the rupiah’s stability amidst global economic fluctuations.
Summary
Bank Indonesia (BI) is set to expand its monetary operations by incorporating Chinese Yuan (CNY) and Japanese Yen (JPY) instruments, including spot and swap transactions. This strategic move aims to fortify the Indonesian rupiah’s stability and deepen the domestic foreign exchange market. The initiative responds to escalating demand for CNY and JPY, driven by a significant increase in Local Currency Transactions (LCT) with China, which can now reach up to US$1 billion monthly. BI anticipates this expansion will alleviate pressure from the US dollar and notes a 1.6-fold increase in LCT by October 2025, with participant numbers soaring.
Despite these proactive measures, the rupiah’s exchange rate remains under pressure, depreciating by 0.69% to Rp 16,735 per US dollar by November 18, 2025, mirroring broader regional currency movements. To counter this depreciation and maintain stability, BI has implemented robust intervention strategies, including direct interventions in the spot and Non-Deliverable Forward (NDF) markets, and purchasing Government Securities (SBN). Additionally, increased conversion of foreign exchange into rupiah by exporters, boosted by the Natural Resources Export Proceeds (DHE SDA) policy, and additional corporate forex supply contribute to supporting the rupiah.
