Indonesia's BRICS membership drives discussion on currency settlement with Russia Amid SWIFT Exclusion

On January 20, a Russian diplomat confirmed that Russia is in talks with Indonesia, a new BRICS member, to explore using local currencies for trade due to Moscow's exclusion from the global financial system for cross-border transactions.

Following the European Union's decision in 2022 to remove Russian banks from SWIFT - the global financial messaging network that relies heavily on the dollar - Russia has struggled to carry out international transactions, Caliber.Az reports per foreign media.

While Russian banks can bypass the SWIFT ban using alternative methods like faxes or bilateral messaging systems, the country is prohibited from using the US dollar, forcing it to explore trade using local currencies.

In early 2025, Indonesia officially joined BRICS, a group of emerging nations led by Russia that is increasingly focused on reducing the US dollar's dominance in global trade. Amid this expansion and Russia's ongoing SWIFT exclusion, Moscow is negotiating with Indonesia to potentially use the rupiah or ruble for bilateral transactions.

“Russia’s exemption from 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.

However, Moscow is not setting a deadline for finalizing a deal on local currency settlements. “The most important thing is finding solutions that are suitable and mutually beneficial,” Tolchenov added.

The diplomat also highlighted the need for the private sector to be involved in discussions, alongside central banks and finance ministers. “Because businesses would want to have independent and sustainable channels of financial settlements,” Tolchenov explained.

Tolchenov further addressed BRICS' ongoing agenda of de-dollarisation, stating that the alliance is currently focused on promoting the use of national currencies, rather than developing a new currency.

"The fact that Indonesia is now a BRICS member will hopefully help us resolve the payment issues," he said.

Indonesia has already adopted local currencies in its trade with China, Japan, and ASEAN neighbours Malaysia and Thailand. In 2024, Bank Indonesia secured a memorandum of understanding (MoU) with India’s central bank, aiming to facilitate cross-border transactions using the Indian rupee and the Indonesian rupiah.

In 2023, Russian President Vladimir Putin revealed that 80% of Moscow’s trade with China is conducted using the ruble and the Chinese yuan. Moscow also claimed that approximately 90% of trade between Russia and India is carried out using local or alternative currencies.

BRICS, which includes founding members India and China, also counts Brazil, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates (UAE) as members.

According to official data, trade between Indonesia and Russia totalled $3.1 billion in the period from January to November 2024, with Indonesia recording a deficit of $830 million.

By Aghakazim Guliyev