China, Indonesia central banks unveil deals to boost financial cooperation

The central banks of China and Indonesia unveiled a series of financial cooperation agreements at the second governors' meeting of the joint working mechanism held in Shanghai on Thursday, aimed at boosting local currency transactions between the two countries.

At the event, the People's Bank of China (PBOC) and Bank Indonesia (BI) signed a memorandum of understanding (MoU) to establish renminbi (RMB) clearing arrangements.

"In less than a year, our cooperation has achieved a series of practical outcomes. The Indonesian government has successfully issued RMB-denominated Dim Sum bonds in Hong Kong, and it is expected that Panda bonds will be issued soon. We believe that the two central banks have broad space for further exploration in areas such as local currency settlement and payment cooperation, digital currencies, and regional stability," said Pan Gongsheng, PBOC governor.

BI Governor Perry Warjiyo said the two central banks will provide strong financial support for trade and investment flows between the two countries.

The cross-border QR payment linkage between China and Indonesia was officially launched at the event, with Bank Mandiri becoming a direct participant in the cross-border RMB payment system.

Additionally, the two central banks and the Hong Kong Monetary Authority (HKMA) signed a MoU to establish a cooperation framework aimed at promoting bilateral transactions in Indonesian rupiah (IDR) and offshore RMB between Indonesia and Hong Kong.

"So, too, does the demand for more efficient, cost-effective payment and settlement solutions. Today's MoU turns this growing need into action. The LCT framework will enable direct CNH, IDR quoting and settlement, allowing banks in Hong Kong and Indonesia to better serve their clients," said Eddie Yue, chief executive of the HKMA.

Under the MoU, a bilateral currency transaction framework will be implemented to facilitate the direct exchange and settlement of IDR and offshore RMB in cross-border trade and investment activities amongst corporates and institutions in Indonesia and Hong Kong. This initiative is designed to enhance the efficiency of cross-border transactions, while promoting greater use of regional currencies.

BI and the HKMA will lead the preparatory work for the bilateral currency transaction framework, including the development of comprehensive operational guidelines. The two authorities will also identify and appoint selected banks in Indonesia and Hong Kong as appointed cross-currency dealers to participate in the framework.

China, Indonesia central banks unveil deals to boost financial cooperation

A strong El Nino is driving unusually high temperatures and slashing rainfall in India during the country's June-September monsoon season, threatening crop yields and disrupting supply chains.

In the western state of Maharashtra, the third largest by area in India, farmers are worried about their harvest prospects and delaying planting schedules.

"Half of June has passed, and the rains still haven't arrived. We're currently cultivating sugarcane. Look at the plants behind me -- they are withering because there has been no rain. And because of the dry weather, we are also having to delay planting cotton," said Jalindar Wagh, a local farmer.

The impact of delayed planting has spread to the upstream supply chain, including sales of seeds and pesticides. In Maharashtra, products that are normally in peak sales season are now straggling, and some distribution businesses have halted operations altogether.

"There has been no rain across the entire state of Maharashtra. Because of that, our seeds and pesticides are lying in stock, since farmers aren't planning to buy them. If the rains keep getting delayed, the consequences, along with inflation, will start to show," said Rajendra Wagh, a local distributor.

With this year's monsoon rainfall expected to be below normal, India's meteorological department is urging farmers to switch to crops that require less water, fearing that overuse of irrigation systems could broaden the impact.

"Agriculture is rain-dependent. If this year's monsoon -- which we expect that it will be below normal, then it will impact those farmers also. So that's why we are advising farmers to go for such crops which require less water. Agriculture impacts electricity because hydropower electricity, which depends on the flow of rivers, will also dry up, because, due to lesser amount of rainfall, it will also impact the generation of hydro electricity. So, overall impact will be devastating," said meteorologist Mahesh Palawat.

El Nino induces drought in India, weighing on agriculture