Jakarta. A Russian diplomat said Monday that his country had engaged in talks to use local currencies for trade with BRICS newcomer Indonesia as Moscow remained an outcast from the international system for cross-border transactions.
In 2022, the European Union (EU) decided to exclude Russian banks from SWIFT, the dollar-dominated global financial messaging network, in response to the heightened Russo-Ukraine war. SWIFT allows banks worldwide to exchange messages about international transactions. Russian banks, however, can still get around the SWIFT ban, although they have to resort to faxes or bilateral messaging systems. Russia is barred from using the US dollar, thus resulting in the country having to use local currencies to trade.
Fast forward to early 2025, Indonesia officially joined the Russia-led BRICS, a bloc of emerging countries known for its push to reduce the American dollar’s dominance in world trade. Amidst the recent BRICS expansion, coupled with the SWIFT ban, Russia is negotiating with Indonesia to possibly use the rupiah or ruble in their bilateral transactions.
“Russia’s exemption from the SWIFT has made it very difficult for us to use financial settlements in American dollars. That’s why we should find appropriate ways to use national currencies. This is something that the Russian and Indonesian financial institutions are working on. … So yes, we are already discussing the [local currency] systems,” Russian Ambassador to Indonesia Sergei Tolchenov said in an interview with The Jakarta Globe.
Moscow, however, prefers not to set any deadline to this local currency settlement deal.
“The most important thing is finding solutions that are suitable and mutually beneficial,” Tolchenov told the Globe.
The diplomat wants the private sector to partake in the discussions besides the central banks and finance ministers.
“Because businesses would want to have independent and sustainable channels of financial settlements,” Tolchenov added.
The Russian diplomat also talked of BRICS’ de-dollarization agenda. According to Tolchenov, the alliance is currently focusing on promoting the use of national currencies rather than creating an entirely new currency from scratch. “The fact that Indonesia is now a BRICS member will hopefully help us resolve the payment issues,” he said.
Indonesia is already using local currencies when trading with China and Japan, as well as ASEAN neighbors Malaysia and Thailand. Bank Indonesia already secured a memorandum of understanding (MoU) for a similar deal with the central bank of fellow BRICS member India in 2024. The MoU would pave the way for the use of Indian rupee and rupiahs for cross-border transactions.
In 2023, Russian President Vladimir Putin revealed that the ruble and Chinese yuan already made up 80 percent of Moscow’s transactions with China. The Kremlin also claimed that about 90 percent of India-Russia trade already took place using local or alternate currencies.
Both India and China are the founding members of BRICS. The group includes Brazil, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates (UAE).
Official government figures show that Indonesia-Russia trade amounted to $3.1 billion in January-November 2024. Indonesia recorded an $830 million deficit over the said period.
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