Russia, Indonesia May Switch To National Currencies In Bilateral Trade

Russia has proposed to Indonesia to use their national currencies for trade settlements, said Denis Manturov, Russia’s Minister of Industry and Trade, Russian media reports, just days after Russian Prime Minister Dmitry Medvedev made the same offer to Vietnam.

“We [Russia] expect active support in the transition to the use of national currencies in our trade relations with [a number of countries] and Indonesia, too,” Manturov said on Thursday during the 10th session of the Russian-Indonesian Intergovernmental Commission on Trade, Economic, and Technical cooperation.

Russia has already discussed the initiative with India, China, Vietnam, and Thailand, Manturov said.

He added that this would strengthen both countries’ local currencies and give an opportunity to work without dollars and euro.

The latest proposal comes amid a growing effort amongst emerging market nations to further de-dollarization.

“The dependence on the dollar is our common headache,” said Sofyan Djalil, the Indonesian Coordinating Minister, adding that Indonesia is ready to consider mutual trade in national currencies.

Although at first there could be challenges implementing this idea, they could be resolved at this stage while trade is not very big, he added.

Trade between Russia and Indonesia is estimated at $2.5 billion in 2014 and the two nations plan to double this figure to $5 billion in 2016.

Russia’s proposal will be discussed at a meeting of working groups of the Bank of Russia and the Central Bank of Indonesia. “I am sure we will be able to implement the project with a serious integrated approach,” Djalil concluded.

On Tuesday, Russian Prime Minister Dmitry Medvedev proposed to his Vietnamese counterpart that both countries start using their national currencies in bilateral trade more actively, saying it would help boosting economic relations.

In March, Turkey’s Ministry of Economy said it was considering a move to settle payments with Russia by using local currencies for major investment deals.

Turkish President Recep Tayyip Erdoğan recently proposed switching to national currencies in bilateral trade with his Iranian counterpart Hassan Rouhani.

In January, Russia and Thailand held discussions on switching to national currencies in bilateral trade.

India and Russia have also been rumored to be on the verge of similar currency agreement, alongside a growing number of emerging and frontier economies that are ramping up de-dollarization efforts.