Jakarta - Indonesia has ordered state companies to place their US dollars at home and plans to scrap a levy on overseas palm-oil sales to bolster the rupiah after the currency plunged to its lowest level since 2001, media reports said Wednesday.

The government and central bank also plan to buy bonds from the market to restore investor confidence, Finance Minister Sri Mulyani Indrawati said Tuesday night after a cabinet meeting.

The rupiah fell as much as 8.7 per cent Tuesday to 11,900 against the dollar before recovering to 10,900 on suspected intervention by the central bank as Indonesian stocks declined to their lowest values since December 2005.

The Jakarta Post quoted Bank Indonesia Governor Boediono as saying that excess liquidity had caused the rupiah's drop after the central bank reduced a reserve requirement.

Indrawati said state companies would also have to report their dollar requirements and buy foreign currencies through local banks.

Indonesia, the world's biggest palm-oil producer, wants to spur the rupiah and bolster investor confidence, which has been eroded as funds desert emerging markets to make investments that are seen as less risky amid the global credit and financial crisis.

Indonesia might also draw on currency-swap agreements with central banks in China, Japan and South Korea if needed, Indrawati said.

The minister said to help raise the dollar supply, the government would speed up implementation of projects that have already received commitments on their financing, including those from bilateral or multilateral groups. (dpa)