UPDATE 1-Indonesia to smooth rupiah moves to ensure recovery

SINGAPORE, Nov 11 (Reuters) - Indonesia's finance minister said on Wednesday that the country would smooth moves in the rupiah to ensure the country's economic recovery stays on track. The rupiah is the best performing currency in Asia so far this year, having rallied nearly 17 percent against the U.S. dollar. It has been buoyed by waves of capital inflows and the central bank has been tolerating its rise to help quell inflation. "We are not targeting the rupiah at a certain level. We are just making sure that the process of recovery is not disrupted," Mulyani Indrawati told reporters on the sidelines of an APEC regional meeting in Singapore. "We will try to smooth out the movement of our currency," said, adding that the country's recovery was still at a nascent stage. The rupiah's rise was partly due to the dollar's broad decline, reflecting the weaker U.S. economy, she said. Unlike some Southeast Asian economies, the region's largest economy has avoided a recession despite the global economic downturn, cushioned by its resilient domestic demand. Foreign investors have flocked to the country's bond and stock markets in recent months, attracted by higher yields. Indrawati said the government would monitor capital flows into the country that may create the risk of asset bubbles. She also said an international consensus was building up to rebalance the global economy, under which Asian countries would be called on to spur domestic demand to reduce their reliance on exports, but she cautioned against any hasty move. "We are fully aware that many countries, especially emerging market countries including China, require quite a lot of preparations so that this adjustment will not damage the recovery," she added. China has kept the yuan virtually pegged to the dollar since mid-2008 to support exports, but some countries have called for Beijing to unshackle the currency and let it resume its appreciation help correct the global economic imbalances. (Reporting by Kevin Yao and Saeed Azhar; Editing by Kim Coghill) Keywords: INDONESIA ECONOMY/RUPIAH ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.