Indonesia Rupiah
Domestic transactions using foreign currencies, including US dollars, are banned in Indonesia.Getty Images

Domestic transactions using foreign currencies, including US dollars, are now banned in Indonesia with a few exceptions.

The Central Bank of Indonesia decision comes amidst the fast deterioration of the Indonesian rupiah against the US dollar.

The ban will cover all transactions from hotel accommodation payments to flights and rental fees, reported RT News.

Anyone found violating the law will be sentenced to a year in prison or a fine of $15,000 (£9,605).

Exceptions include payment of wages to foreign employees in dollars by international companies.

Also excluded are companies that are investing in energy facilities and infrastructure.

While the hospitality sector can advertise hotel room prices and restaurant meals in dollars, all payments have to be settled in Indonesian rupiah.

The announcement that first came from the head of Bank Indonesia, Eco Yulianto, in April will be effective starting 1 July.

The regulations have raised fears of increased operating costs amongst several firms that carry out transactions in US dollars. However, Bank Indonesia says the move is aimed at decreasing the dependence on the US dollar, amongst other foreign currencies.

Peter Jacobs, a spokesman for the central bank, said, reported The Wall Street Journal: "If there are corporations that have concerns about transactions about any problems related to this, they can write us a letter and we'll see the possibility to give them a delay."

The Indonesia rupiah fell to a new multi-year record in March with manufacturing conditions reportedly falling to the weakest level in history.