The new rule, announced by the central bank late on Wednesday, means foreign exchange purchases above an equivalent of US$100,000 (S$150,000) per month must be supported by underlying transactions.

The regulation come after policy makers in Jakarta have sought to protect the economy from the global economic crisis as the rupiah has fallen against the dollar.

Analysts said the move may be aimed at preventing local investors from shifting their rupiah holdings into foreign currencies.

Mr Enrico Tanuwidjaja, a strategist at OCBC Bank, said the new rule was meant to stem speculation.

'Genuine dollar demand is OK. That's why it's not a form of capital control.' The rupiah fell almost 4 per cent to hit 11,950 per dollar, its weakest since April 2001, at which level state banks were seen selling dollars. Traders suspected the intervention was on behalf of the central bank.

The central bank raised its benchmark interest rate in October to 9.5 per cent and kept it at that level this month.

Since most central banks are currently cutting rates to try to support growth, Indonesia's policy decisions were seen by analysts as moves to support the rupiah, which has fallen 20 per cent against the dollar so far this year.

Indonesia's 5-year credit default swaps, an insurance-like instrument that protects against default, widened by about 70 basis points to 750.

But trading in the debt instrument was illiquid with the offer at 900 basis points, according to a Hong Kong-based trader.

For Indonesian individuals or entities, the new ruling affects all types of transactions such as spot, forward and derivatives, the central bank said.

For foreigners, the new ruling only applies to purchases of foreign currencies on the spot market.

In the case of local individuals or entities, they must submit a tax identification number to commercial banks when conducting the foreign exchange transactions. -- REUTERS