New settlement framework lets businesses use rupiah and Singapore dollars while reducing foreign exchange risks.
Singapore and Indonesia are making it easier for businesses to conduct eligible cross-border transactions using their local currencies. A new local currency transaction framework is now operational, providing a more direct channel for transactions between two of Southeast Asia’s closely connected economies.
Local Currency Framework Goes Operational
The Monetary Authority of Singapore and Bank Indonesia have operationalized the Local Currency Transaction Framework, allowing eligible bilateral transactions to be conducted directly in Indonesian rupiah and Singapore dollars. The initiative is designed to support bilateral trade while encouraging wider use of local currencies for transactions within ASEAN.
Trade and Investment Covered
Appointed Cross Currency Dealers in both countries will facilitate eligible transactions, including current account transactions and direct investment, using the rupiah-Singapore dollar pair. The central banks said the framework should give businesses greater flexibility while potentially reducing foreign exchange costs and risks associated with converting through another currency.
Major Banks Join Framework
Singapore has appointed DBS, OCBC and UOB as Appointed Cross Currency Dealers. Indonesia’s participating institutions include Bank Mandiri, Bank Central Asia, and Bank Negara Indonesia, among others. Direct quotations between the rupiah and Singapore dollar are another key component intended to encourage greater use of the currency pair.
Agreement Builds on Years of Cooperation
The framework follows a memorandum of understanding signed by the two central banks in August 2022, followed by an agreement on operational guidelines in April 2026. Banking executives expect the arrangement to generate greater interest in direct rupiah-Singdollar conversion and hedging products while giving companies additional options for managing foreign exchange exposure.
Batam Could Benefit From Closer Integration
The development is particularly relevant to areas with extensive Singapore-Indonesia commercial ties, including Batam and the wider Riau Islands. Companies engaged in cross-border investment, services, manufacturing, logistics, and trade could benefit from more convenient local-currency transactions. More broadly, the initiative supports deeper financial integration between Indonesia and Singapore while advancing ASEAN efforts to strengthen regional currency usage.
The rupiah-Singapore dollar framework adds another layer to the increasingly interconnected economic relationship between Indonesia and Singapore. For Indonesian and Singaporean businesses, direct local-currency settlement could provide greater flexibility and help manage foreign exchange costs and risks. Its significance could be especially visible in highly integrated economic corridors such as Batam-Singapore, where investment and commercial transactions regularly cross the border.
Sources: Straits Times (2026) , MAS GOV SG (2026)
Keywords: Singapore Indonesia Trade, Local Currency Transaction, Rupiah Singapore Dollar, Bank Indonesia, Monetary Authority Of Singapore, ASEAN Trade
