The central bank decided to raise the BI rate by 50 points to 7 percent in a meeting of the BI board of governors earlier on Thursday.
Rupiah closed at the level of 10,920 to the US dollar from 11,280 earlier.
"The decision of Bank Indonesia to raise the BI rate was right and was needed to prop up sinking rupiah and stabilize the domestic currency," PT Platon Niaga Berjangka`s financial observer Lukman Leong said here on Thursday.
Lukman, however, said the key factor determining rupiah stability is inflation .
"If inflation could be controlled, there would be less pressure on rupiah," he said. (*)
Editor: Heru Purwanto
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