RUPIAH ADVANCES TO NEARLY RP11,700 PER US DOLLAR

Jakarta, March 23 (ANTARA) - The rupiah has continued to advance over the past one week reaching nearly Rp11,700 per US dollar in the Jakarta interbank spot market here on Monday with market players purchasing the rupiah without letup.

The Indonesian currency traded at Rp11,750/11,760 per US dollar, up 35 points from Rp11,785/11,790 per US dollar at the market's close a day earlier.

Market players again bought the local currency while waiting for the US Federal Reserve (Fed) to buy US government bonds today, Farial Anwar, a money market observer, said here on Monday.

The Fed is planning to buy treasury bonds worth US$300 billion, he said.

The Fed's plan would cause the US market to be flooded with the greenback and the increase in US dollar stocks in money markets was likely to cause the greenback to tumble against other currencies, he said.

The US greenback had tended to be under continuing pressure last week over the reported plan of the Fed to buy government bonds, he said.

Investors had earlier thought that the rupiah would drop sharply because of the US government's plan to withdraw a significant amount of US dollar from the world market to fund the US financial sector stimulus package, he said.

The US government's dollar withdrawal plan by issuing numerous bonds was held back by the Fed's plan to buy the bonds, he said.

The rupiah would likely to advance further because the market's positive sentiment had continued until now, he said.

The Indonesian currency was expected to reach the level of nearly Rp11,500 per US dollar if the favorable market condition went on, he said.

He said the rupiah was now in a very sound position but the gains should not happen too fast and therefore Bank Indonesia (BI) needed to keep its movements under control.

BI must control the speed of the rupiah's appreciation to avoid a drastic fall in case there was a negative factor, he said.