Indonesia central bank tightens rules for domestic dollar purchase

JAKARTA (REUTERS) - Indonesia's central bank has tightened its rules for domestic purchases of U.S. dollars as it tries to bolster the fragile rupiah.

Effective immediately, Bank Indonesia said dollar purchases at banks or money changers above US$25,000 require a document showing the underlying transaction, such as payments for imports, school tuition and health treatment abroad, or offshore loans.

The previous threshold for buying dollars without documents was $100,000. "With this improvement in our regulation, we hope the domestic foreign exchange market will become more stable and will reflect the real demand of foreign exchange for people's economic activity," Bank Indonesia said in a statement issued late on Friday.

Indonesia's rupiah is emerging Asia's second-worst performing currency, shedding nearly 12 per cent this year.

The currency hit a 17-year low on Thursday before strengthening more than 1 percent on the central bank's direct intervention. It closed at 13,980 per dollar on Friday.

Bank Indonesia has said its focus for monetary policy was maintaining the rupiah's stability and has introduced several measures to support the currency.