Indonesian president orders to protect ailing rupiah

Special Report:Global Financial Crisis

JAKARTA, Feb. 6 (Chinese media) -- Indonesian President Susilo Bambang Yudhoyono has ordered the central bank to bolster the value of therupiah to bring it nearer to 11,000 per U.S. dollar and prevent it from depreciating further.

"I sent a message to the Bank Indonesia (central bank) governor to protect the rupiah. It needs to be guarded from depreciating further so that businesses can do their business calculations," the president said Thursday at an industrial site in West Java.

"Bank Indonesia has put its rate to 8.25 percent. That's good trend," the Jakarta Post daily on Friday quoted Yudhoyono as saying.

Meanwhile, Bank Indonesia Governor Boediono said Indonesia is seeking a larger chunk of a currency swap agreement with Japan, more than 6 billion U.S. dollars, to help ward off the rupiah's decline and strengthen the already diminishing foreign currency reserves.

Boerdiono sees a relief in the global liquidity squeeze within the next six months as terrified investors will eventually resurface after seeking shelter in safe-haven instruments.

Like many other countries, the South East Asia's largest economy has been hit by a dollar shortage at banks, a rupiah liquidity squeeze resulting from a high degree of distrust between banks, and dropping demand for loans by companies.

Aside from the Japan swap deal, Boediono said, Bank Indonesia had prepared other lines of defense to boost the supply of foreign currency reserves.

This includes bilateral standby loans with several countries, government loans and planned swap pacts with Australia, the Asian Development Bank and the World Bank, he added.

Bank Indonesia's currency reserves plunged to 50.9 billion at the end of January, from 60.6 billion in July last year, as the central bank sought to ease the decline in the rupiah.