President Susilo Bambang Yudhoyono has called on Cabinet members to carefully prepare a contingency plan ahead of possible shocks in the global financial market in the coming weeks when the US central bank starts to slow down its monetary stimulus.

Yudhoyono expressed anxiousness over the possibility that the Federal Reserve, US central bank, would taper its monetary stimulus, popularly known as quantitative easing (QE), which in recent years poured excess liquidity into Indonesia that prompted the rupiah, bonds and share prices to rally.

'€œIn anticipation of the shocks in the global economy, we should be ready with a contingency plan. If something unexpected happens, we shouldn'€™t be left unprepared,'€ he said on Wednesday at a CEO forum held by Kompas daily.

He also dismissed notions that a tighter US monetary policy had already been priced-in by the market, warning against further weakness in the rupiah and share prices if the QE tapering eventuated.

'€œIf the US decides to taper its quantitative easing policy, then there will be massive pressure'€ on Indonesia'€™s economy, Yudhoyono said.

The Fed'€™s next meeting to decide on the QE tapering is scheduled for Dec. 17-18, the second-to-last meeting for outgoing Governor Ben Bernanke before he is replaced by Janet Yellen on Jan. 31. Bernanke was the first advocator of trimming down the QE, while Yellen has argued that the monetary stimulus is still necessary.

The minutes of the Fed'€™s October meeting, released this month, revealed that the US central bank'€™s executives agreed that the ongoing improvement in the labor market warranted tapering in the quantitative easing policy, which should happen in '€œcoming months'€.

Indonesia'€™s share price indicator, the Jakarta Composite Index (JCI), which on Wednesday rose a slight 0.4 percent to close at 4,251.49, has declined almost 6 percent this month. The index has lost nearly 20 percent since it reached its peak of 5,214 on May 20 this year, partly due to massive outflows of foreign funds on fears over the possible reduction of the US monetary stimulus.

The rupiah on Wednesday hit another low level, depreciating by 48 basis points to trade at Rp 11,813 per US dollar, according to the Jakarta Interbank Spot Dollar Rate (JISDOR). It has depreciated 18 percent year-to-date and is now among Asia'€™s worst-performing currencies.

'€œMany don'€™t realize that our economy is now in a state of shock '€” some even claim that everything is fine, but it'€™s not,'€ the President cautioned.

In anticipation of a bleak outlook in the global economy, top officials from the Finance Ministry, Bank Indonesia (BI), the Financial Services Authority (LPS) and the Deposit Insurance Corporation (LPS) held a full-fledged crisis simulation on Nov. 20.

Finance Minister Chatib Basri stated that he had prepared several policy measures to stabilize the economy and reduce the current account deficit, which he estimated to reach US$31 billion to $32 billion throughout this year, higher than 2012'€™s $21.5 billion.

BI Governor Agus Martowardojo said the central bank was intensifying the campaign to bring home overseas funds to boost dollar liquidity onshore, so that the rupiah would be better cushioned against external shocks.

The central bank might soon introduce a new deposit system for Indonesians living overseas to deposit their funds in their home country, Agus said on Wednesday. '€œFor example, they will not have to pay the deposit tax of 20 percent, in addition to the guarantee that their money could be pulled out easily. This could draw funds to Indonesia.'€

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