RUPIAH WEAKENS 10 POINTS EARLY TUESDAY

Jakarta, June 2 (ANTARA) - The rupiah weakened 15 points against the US dollar early Tuesday, after the local currency had strengthened over the past few days, however, its position was still far below the level of Rp10,300 per US dollar.

The Indonesian currency traded at Rp10,240-Rp10,250 per US dollar, down 15 points from Rp10,225-Rp10,230 at the market's close a day earlier.

The rupiah's depreciation was still considered normal, according to Kostaman Thayib, Banking Retail Director of PT Bank Mega Tbk.

However, he believed that the rupiah releasing action was relatively small, as market players were still cautious of the report from the Central Bureau of Statistics (PBS) which announced that the May inflation rate was lower than that in the previous month.

The May inflation rate this year was recorded at 0.04 percent and the year on year inflation until the end of this year was estimated to be below the level of five percent, while the government's target was between 5 and 7 percent, he said.

Therefore, the rupiah still had a chance to strengthen again, as seen in the domestic economic indicators which were improving, he said.

If there is no obstacle, the rupiah might reach the level of Rp10,200 per US dollar, but the increase should not be too fast, he said.

The May inflation rate was lower because the people were very careful in spending their money, as they preferred to keep their funds in banks, he said.

However, the people should be encouraged to shop in order to boost the consumption sector, he said. Low consumption growth rate could endanger the national economic growth, he said.

"We are optimistic that Indonesia will become a potential market, as the interest of investors in putting their funds in this country is getting bigger," he said.