Jakarta (ANTARA) – Indonesia’s plan to issue its renminbi-denominated Panda Bonds worth approximately US$1 billion serves as part of a strategic effort to diversify state funding sources and reduce dependence on the US dollar.”This is a diversification of our funding sources. Previously, global funding was only dollars, but we're diversifying to Japan, Australia, and China,” Finance Minister Purbaya Yudhi Sadewa told reporters at the Presidential Palace Complex in Jakarta on Thursday.A central component of the strategy is linking the debt issuance directly with Local Currency Transaction (LCT) frameworks already established between Bank Indonesia (BI) and the People’s Bank of China.By settling trade and financial transactions in local currencies—yuan and rupiah—Indonesia aims to bypass intermediate dollar conversions entirely, which helps relieve devaluation pressure on the domestic currency.”We will use LCT—Local Currency Transaction. So they pay in yuan, and we receive rupiah here between banks and central banks. The rupiah will tend to strengthen due to reduced pressure from the dollar,” Purbaya added.Proceeds from the Panda Bond issuance will be allocated to cover a portion of the State Budget deficit and support ongoing government expenditure requirements, he explained.Purbaya noted that the initial issuance size is intentionally capped at around US$1 billion to introduce Indonesian sovereign debt instruments to the onshore Chinese market.The Finance Ministry will assess the results of the initial book-building process before determining the scale of subsequent issuances in the mainland market.The move marks another step in BI and the ministry’s broader agenda to expand local currency settlement mechanisms with key trading partners across Asia.