Jakarta, June 9 -- Bank Indonesia raised its benchmark interest rate by 25 basis points to 5.50 percent, seeking to support the rupiah, attract foreign capital inflows and contain inflation pressures.

Governor Perry Warjiyo announced the move after the central bank's Board of Governors meeting on Tuesday, saying higher yields would help draw foreign portfolio investment.

"Bank Indonesia considers further measures necessary to strengthen rupiah stabilization by increasing yields and introducing incentives to encourage foreign investment," Warjiyo said.

The decision followed a sharp decline in the rupiah. The currency opened at Rp18,134 per US dollar on Tuesday after falling 152 points, or 0.84 percent, to Rp18,188 a day earlier.

Warjiy...