The textile and textile product (TPT) industry tends to use the United States (US) dollar instead of Indonesia's local currency or local currency settlement (LCS) along with China, Japan, Malaysia and Thailand for their export and import activities. The maneuver was taken to reduce the risk of exchange rate fluctuations and currency exchange fees when transacting across countries. Secretary General of the Indonesian Filament Yarn and Fiber Producers Association (APSyFI) Redma Gita Wirawasta said the trend was due to petrochemical and cotton-based textile raw materials purchased mostly using US dollars. On the other hand, the majority of exports for textile products are sold at US dollars.

 “In textiles, we still use a lot of US dollars. Except with Japan, there are indeed some who use LCS transactions. With China, it seems that they rarely use LCS, because they themselves are still asking us to use US$," said Redma via WhatsApp message, Wednesday (16/2/2022).

On the other hand, Redma said, the use of the US dollar was carried out to reduce the burden on the exchange rate as a result of transactions resulting from exports and imports of textile products.

"If we switch to the currency of an LCS partner country, there will be additional costs, including exchange rate risk," he said.

Previously. Head of the Trade Assessment and Development Agency (BP3) of the Ministry of Trade Kasan Muhri said the performance of domestic exports and imports was relatively stable amid the potential strengthening of the US Dollar exchange rate throughout 2022.

Kasan explained that the implementation of local currency settlement (LCS) transaction agreements with China, Japan, Malaysia and Thailand helped maintain the stability of the rupiah exchange rate against the US dollar this year. Kasan said the volume and value of LCS transactions throughout 2021 experienced a significant increase since it was rolled out in 2018.

"The LCS between Bank Indonesia [BI] and the Central Bank of China for bilateral transactions including exports and imports shows BI's confidence in the stability of the rupiah exchange rate in the future and dependence on the US dollar is no longer too worrying," Kasan said via WhatsApp message, Wednesday (16/03). 2/2022).

In addition, Kasan said, the position of foreign exchange reserves above US$137 billion will add confidence for exporters and importers to face the impact of the strengthening US dollar exchange rate following the tapering off policy from the United States Central Bank or the Fed late last year.

"I think our export and import performance is quite resilient in facing the risk of the impact of the Fed's policy," he said.