UAE, Indonesia sign MoU to use local currencies for trade

Khaled Mohamed Balama, Governor of the Central Bank of the UAE, and Perry Warjiyo, Governor of Bank Indonesia, signed a Memorandum of Understanding supporting the steady growth of trade relations between the two countries through the establishment of a framework that promotes the use of local currencies for bilateral transactions.

The partnership between the UAE and Indonesia witnessed a remarkable growth in non-oil trade, doubling between 2017 and 2023 to reach more than Dhs16 billion.

The MoU defines a framework comprising various elements and measures to facilitate the settlement of cross-border trade transactions in the two national currencies (the UAE Dirham and the Indonesian Rupiah) as agreed between importers and exporters. It also outlines the types of eligible transactions and allows for developing the conditions to support hedging and liquidity management activities in Dhs-IDR.

This collaboration marks a key milestone in strengthening bilateral financial cooperation and will help businesses reduce transaction processing costs.

Under this agreement, the Central Bank of the UAE and Bank Indonesia will collaborate on promoting the use of their national currencies by supporting the gradual implementation of the framework, which also aims to develop financial markets to support economic growth and financial stability.

Commenting on the MoU, Khaled Mohamed Balama, Governor of the Central Bank of the UAE, said, “This agreement constitutes a strong basis for strengthening future partnerships between both parties, laying the ground for more business opportunities in the banking and financial sector and supporting trade and investment growth.” Perry Warjiyo, Governor of Bank Indonesia, said, “We are pleased to embark on another cooperation to deepen financial integration and strengthen the economic relations of the UAE with Indonesia. Local currency transactions would further support financial stability and resilience, and deepen the financial market to address heightened external vulnerabilities.”

Separately, over 70 Indonesian firms are set to participate in the trade mission organised by Dubai International Chamber, one of the three chambers operating under the umbrella of Dubai Chambers, aiming to explore direct business ventures in Dubai or bolster ties with companies already operating in Dubai and the UAE to boost trade relations.

During their participation in the trade mission events, the Indonesian delegates hailed Dubai and the UAE as prime destinations for Indonesian businesses in the Middle East, considering them financial and logistical hubs with business-friendly policies.

They highlighted the direct impact of the Comprehensive Economic Partnership Agreement (CEPA) between the UAE and Indonesia on bilateral trade, foreseeing a doubling of trade and investment in the near future.

In a statement to the WAM recently, the Director-General of National Export Development at the Indonesian Ministry of Trade Didi Sumedi emphasised the significant boost in bilateral trade, which surged from $4 billion in 2021 to over $5 billion, with non-oil trade accounting for around $4 billion.

He projected that CEPA would further catalyse bilateral trade growth. He outlined key sectors driving trade expansion, including steel, chemicals, fertilisers, plastics, and paper products.

M Pradana Indraputra, Senior Advisor to the Minister on National Entrepreneurship Development of Indonesia, highlighted the event’s significance in facilitating information exchange and fostering opportunities for bilateral cooperation. He noted the participation of 17 companies from Dubai and over 70 Indonesian companies, underscoring the event’s role in paving the way for direct partnerships through discussions and bilateral meetings.

On her part, Shinta Widjaja Kamdani, Coordinator Vice Chairwoman on Maritime, Investment, and Foreign Affairs at Kadin Indonesia, said, “The UAE and Indonesia have many common denominators and at the same time complement each other, indicating that the two countries are working to strengthen their economies to solidify their positions in both regional and global arenas.”

Kamdani emphasised the importance of the step taken by the Dubai International Chamber, expressing her hope to see more cooperation between companies from Indonesia and the UAE.

Arab bourses’ market cap hit $4.36tr: The market cap of Arab stock exchanges exceeded $4.361 trillion at the end of April 2024, according to the Arab Monetary Fund (AMF).

The monthly bulletin data of the AMF said that the market value of the Abu Dhabi Securities Exchange reached $754.7 billion, while that of the Dubai Financial Market was valued at $193.4 billion, and the market value of the Saudi Stock Exchange was $2.87 trillion.

The market value of the Qatar Stock Exchange was $155.4 billion, the Kuwait Stock Exchange was about $135.6 billion, the Casablanca Stock Exchange was $68.9 billion, the Muscat Stock Exchange was $63.2 billion, and the Egyptian Stock Exchange was $34.9 billion.

The market value of the Amman Stock Exchange was $23.4 billion, the Bahrain Stock Exchange was $21.2 billion, the Beirut Stock Exchange was $17.2 billion, the Tunis Stock Exchange was $8.1 billion, the Damascus Stock Exchange was $5.9 billion, and the Palestine Stock Exchange was $4.3 billion.