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    Southeast Asia
     Sep 1, 2005
Bank Indonesia raises interest rate to prop rupiah

JAKARTA - Bank Indonesia on Tuesday announced a number of measures to prevent the rupiah from sliding to a more precarious level. The rupiah closed at 10,450 per US dollar after falling to 11,000 in the opening session Tuesday.

Bowing to strong pressure from economists, the central bank raised the benchmark interest rate by 75 basis points to 9.5% on its promissory notes (SBI). It also raised its one-week overnight

 

rate by 100 basis points to 8.5% effective from Tuesday. Senior economists urged President Susilo Bambang Yudhoyono to follow suit by taking a concrete measure to regain market confidence and restore stability.

Former Finance Minister Frans Seda said the country's economy is in a critical situation though not yet in crisis. Seda said the government has been too slow in finding a solution to problem. It is not the first time the country is facing critical situation, but the government had always succeeded in overcoming the problem with firm measures. He suggested immediate abolition of oil fuel subsidy as well as the adoption of a pro-market policy.

(Asia Pulse/ANTARA)

 

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