Wahid urges help for rupiah

The rupiah has fallen 9% against the US dollar

Indonesia's President Abdurrahman Wahid, facing a growing crisis of confidence in his handling of the economy, has told officials to help rescue the country's sickly currency.

He urged prompt action by the central bank to boost the rupiah on Tuesday after it hit its lowest level in more than seven months last Friday.

His comments gave some respite to the rupiah, which has fallen 9% in value against the US dollar in the last few days.

Mr Wahid: Under pressure over economy

But they were not enough to convince the stock market, where prices tumbled to their lowest in 12 months.

The slide came amid concerns over domestic politics and a belief the rupiah will soon be falling again, dragging the economy down with it.

"Firm steps are needed (by the central bank) to help the rupiah," Mr Wahid told reporters.

He urged state-controlled banks to dip into their reserves to prop up the currency.

And he ordered his finance minister to review economic projections in this year's budget.

Stock market

Mr Wahid's comments gave a quick boost to the rupiah, which hit a seven-month low of 8,768 to the dollar on Friday - far below the 7,000 to the dollar assumed in the government's budget for this year.

The rupiah hit a low last week

It had risen to 8,500 by the end of the afternoon.

But the slight recovery did not stop the main stock market index from slipping below 500 for the first time in 12 months, closing on Tuesday at 497.82.

Correspondents say the rupiah's slide and lower-than-expected growth figures pose a serious threat to Mr Wahid's government in its quest to boost the economy and implement democratic reforms.

Mr Wahid insisted the rupiah's fall was only temporary and said part of the blame lay with higher interest rates overseas.

But traders said domestic political uncertainty and concern over Mr Wahid's management of the economy were major factors in the growing loss of confidence in Indonesia.