RUPIAH STRENGTHENS TO RP10,500 EARLY MONDAY

Jakarta, May 4 (ANTARA) - The rupiah strengthened to Rp10,500 per US dollar in the Jakarta interbank spot market here on Monday morning as investors purchased the local currency following an official report the country experienced a deflation of 0.31 percent in April.

The Indonesian currency traded at Rp10,465/10,475 per US dollar, up 120 points from Rp10,585/10,595 at the market's close last weekend.

The April 2009 inflation which was lower than the previous month's inflation rate created a positive sentiment in the domestic money market, Edwin Sinaga, a money market observer, said here on Monday.

He estimated the market's positive sentiment would continue until the market's close in the afternoon as the rupiah purchasers were quite active.

"We predict the rupiah will continue to strengthen and to be away from the level of Rp10,500 per US dollar," he said.

He hoped that the rupiah gains would not be too rapid because it would negatively affect exporters.

The rupiah advanced in accordance with Indonesia's improved economic performance, despite the fall in exports as overseas market demand had plunged, he said.

Therefore, the government was trying to find an alternative by diverting the country's export market to the growing East European countries although it was not easy to get there, he said.