South Korea and Indonesia have recently announced a partnership to encourage the use of local currencies in bilateral transactions. This move is aimed at reducing the reliance on the US dollar and promoting trade between the two countries.
The partnership was announced during a meeting between the finance ministers of South Korea and Indonesia in Bali, Indonesia. The two countries have agreed to promote the use of their respective currencies, the Korean won and the Indonesian rupiah, in trade and investment transactions.
This partnership is significant as it marks a shift away from the traditional practice of using the US dollar as the primary currency for international trade. The use of local currencies in bilateral transactions can help reduce transaction costs and currency risks, as well as promote economic growth and stability.
South Korea and Indonesia are both major economies in Asia, with a combined GDP of over $2 trillion. The two countries have a strong trade relationship, with South Korea being one of Indonesia’s top trading partners. In 2020, bilateral trade between the two countries amounted to $16.5 billion.
The partnership between South Korea and Indonesia is part of a larger trend towards the use of local currencies in international trade. Many countries are looking to reduce their reliance on the US dollar, which has been the dominant currency for international trade for decades.
China has been at the forefront of this trend, promoting the use of its currency, the yuan, in international trade. The yuan has become increasingly popular in recent years, with many countries now using it for trade with China.
The use of local currencies in international trade can also help reduce the dominance of developed countries in the global economy. Developing countries often have to rely on developed countries for access to foreign currencies, which can put them at a disadvantage in international trade.
The partnership between South Korea and Indonesia is a positive step towards promoting economic growth and stability in Asia. By reducing their reliance on the US dollar and promoting the use of local currencies, these two countries are setting an example for others to follow.
Overall, the partnership between South Korea and Indonesia to encourage the use of local currencies in bilateral transactions is a significant development in the world of international trade. It marks a shift away from the dominance of the US dollar and towards a more diverse and stable global economy.
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