RUPIAH STRENGTHENS TO NEARLY RP10,200 PER US DOLLAR

Jakarta, June 1 (ANTARA) - The rupiah strengthened to nearly Rp10,200 per US dollar in the Jakarta interbank spot market here on Monday morning as investors hunted for the local currency.

The Indonesian currency traded at Rp10,255-Rp10,265 per US dollar, up 25 points from Rp10,280-Rp10,290 per US dollar.

The rupiah's movement was quite good and indicated that a big amount of foreign funds was still flowing into the domestic market, Edwin Sinaga, a domestic money market observer, said here on Monday.

Domestic demand for the greenback was adequately met and this eliminated pressure on the local unit and in fact it helped it to strengthen, he said.

State-owned companies' demand for the greenback could be anticipated, especially thanks to the foreign funds inflow, particularly funds from Middle Eastern investors who were interested in syariah (Islam-based) banking business, he said.

"We are optimistic that the rupiah will further move upward and this week it might reach the level of Rp10,200 per US dollar," Sinaga said.

However, despite the rupiah's appreciation, transaction activity was still low because a number of market players were still watching outside (the domestic money market), and they were waiting for further developments, he said.

Meanwhile, market players who had entered the market, purchased the rupiah in large amount, bolstering the local currency to strengthen, he said.

He believed the rupiah would continue to go up in the afternoon but he hoped the increase would not be so fast because it could affect Indonesia's exports.

Sinaga said the rupiah's gain showed that the national economic performance was quite good.

Indonesia's economic growth in the third and fourth quarters of this year would be better than in the previous quarters, economic observer Faisal Basri said recently.

"I am optimistic that the economy will grow better. After all, the consumers confidence index in the second quarter increased from 102 to 103," he said here on Friday.

Indonesia's economic growth happened to drop from 6.1 percent to five percent, and finally to the 4.4 percent position.

He compared the drop of the economic growth of China and of Indonesia, saying China's economic growth fell more steeply. China's economic growth dropped from 9 percent in 2008 to 6.1 percent in 2009 while India from 8 percent to 5.3 percent.