BRICS Member Turns to Yuan in Bold Challenge to the US Dollar

A major BRICS member is stepping up its de-dollarization push by preparing new foreign-exchange operations centered on the Chinese yuan instead of the U.S. dollar.

Indonesia is taking a decisive step toward reducing its dependence on the U.S. dollar, announcing plans to launch new foreign-exchange operations centered on the Chinese yuan and, to a lesser degree, the Japanese yen.

The initiative, revealed by Bank Indonesia officials, is part of the country’s broader strategy to expand the use of Local Currency Transactions (LCT) and avoid routing trade through the dollar altogether.

Bank Indonesia Senior Deputy Governor Destry Damayanti explained that settling transactions directly in partner currencies will ease pressure on the U.S. dollar while strengthening Indonesia’s own FX ecosystem. The yuan, in particular, is becoming the backbone of this shift, reflecting China’s rising influence as a BRICS member and global trading powerhouse.

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Indonesia’s cross-border activity with China has already surged – LCT settlements between the two countries now reach around $1 billion every month. According to Damayanti, this demand is still outpacing capacity, prompting regulators to develop yuan-rupiah instruments for both monetary operations and futures markets. The goal is to make the yuan a seamlessly integrated settlement currency and reduce exposure to dollar-driven volatility.

For Indonesia, the move is as much economic as geopolitical. Avoiding U.S. dollar conversions lowers costs, improves liquidity, and aligns the country more closely with BRICS’ long-term ambition: weakening the dollar’s global dominance by building parallel financial rails centered on the Chinese yuan.

As Indonesia accelerates its LCT framework and deepens yuan-based trade, BRICS gains another foothold in its de-dollarization campaign—one that could reshape currency flows across Southeast Asia in the coming years.