Indonesian central bank has issued a regulation on foreign currency purchases to reduce pressure on the Indonesian currency, balance the supply and demand on the foreign exchange market, and minimize speculation, the national news agency Antara quoted a bank official as saying on Wednesday.

"The regulation remains based on the current free floating system," said the central bank's deputy governor Miranda Goeltom.

According to the regulation, individuals, Indonesian legal entities and foreign parties conducting a purchase of foreign currencies worth more than US$100,000 a month have to state the reason to the banks where the purchase is conducted.

That is to say, anyone using Indonesian rupiah to purchase more than US$100,000  in foreign currencies need to provide underlying transactions, such as invoice used to import goods or paying debts.

"For example, if she or he wants to pay for an apartment or others using dollar, she or he has to show the document for it," the deputy governor said.

The regulation will become effective on November 13, 2008. It will only be effective for foreign parties while buying on the spot market.

She said the central bank did not wish to impose limitation. "We only want to assure a normal purchase or that it will not be used for speculation," she said.

(Xinhua News Agency November 13, 2008)