Indonesia, Hong Kong, China Sign MoU to Boost Rupiah and Yuan Trade

On June 11, 2026, Bank Indonesia (BI), the Hong Kong Monetary Authority (HKMA), and the People’s Bank of China (PBOC) signed a Memorandum of Understanding (MoU) in Shanghai to promote bilateral transactions using the Indonesian rupiah (IDR) and offshore Chinese renminbi (CNH). This move is expected to streamline cross-border trade and investment settlements between Indonesia and Hong Kong, reducing dependency on third-party currencies like the US dollar.

The initiative introduces a bilateral currency transaction framework, enabling direct exchange and settlement of IDR and CNH for participating corporates and institutions. According to the HKMA, this framework is designed to increase the efficiency of cross-border payments and encourage greater use of regional currencies in trade flows. Both BI and HKMA will oversee the preparatory stages, including the creation of operational guidelines and the appointment of select banks as Appointed Cross Currency Dealers.

“The signing of this MoU marks an important step in deepening monetary and financial cooperation among the three authorities,” said Eddie Yue, Chief Executive of the HKMA. He emphasized that the agreement highlights Hong Kong’s strategic role as the leading offshore renminbi hub, a position cemented by PBOC’s ongoing efforts to expand offshore yuan liquidity.

This agreement builds on a series of prior initiatives aimed at enhancing local currency use in bilateral trade. Notably, BI and PBOC signed a similar MoU in September 2020, which set the foundation for direct IDR-CNY settlements. The latest MoU expands these efforts to include Hong Kong, further bolstering the region’s key role in facilitating international renminbi flows.

For Indonesia, the framework aligns with its broader strategy to reduce reliance on the US dollar in trade and stabilize its currency amid global market fluctuations. Meanwhile, China continues to push for the internationalization of the renminbi, with Hong Kong serving as a central clearing and liquidity hub.

Operational details, including participating banks and implementation timelines, are expected to be announced later this year. Market participants will be closely watching these developments, as increased use of regional currencies could impact forex markets and trading volumes in the region.

This MoU also complements a separate agreement signed on the same day between BI and the PBOC to establish a yuan clearing bank in Indonesia. Together, these measures are poised to enhance financial connectivity and support growing trade flows between Indonesia, China, and Hong Kong.

As the framework takes shape, the success of this initiative could serve as a blueprint for other regions looking to strengthen local currency trade integration, further challenging the dominance of the US dollar in global trade settlements.

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