RUPIAH FALLS 65 POINTS AGAINST US DOLLAR

Jakarta, July 3 (ANTARA) - The rupiah fell 65 points against the US dollar at the Jakarta interbank spot market here early Friday as investors purchased the greenback.

The Indonesian currency traded at Rp10,240-10,250 per US dollar, down 65 points from Rp10,175-Rp10,185 per US dollar at the market's close a day earlier.

"The purchases of the US dollars by investors were boosted by the rally of the foreign currency in the global markets," Kostaman Thayib, director of retail banking of PT Bank Mega Tbk., said here on Friday.

Another factor which prompted investors to buy the greenback was an unfounded rumor that the domestic gasoline price would be raised starting July 1, 2009, he said.

However, the rupiah's fluctuation was something normal and still within a range of Rp10,000 to Rp10,300, he said.

He predicted the rupiah's fluctuation would continue during this week. Recently the rupiah strengthened to nearly the level of Rp10,100 per US dollar, however it came under pressure and plunged again to above the level of Rp10,200 per US dollar.

If the upcoming presidential election proceeded peacefully and smoothly, the rupiah might strengthen to a below Rp10,000 per US dollar. And foreign investors might again enter the domestic market, he added.

Foreign investors were cautious in putting their funds in the domestic market in the runup to the presidential election, despite a number of indications reflecting the country's improved economy, he said.

The Central Bureau of Statistics (BPS) earlier reported that the annual inflation rate sharply decreased to 3.64 percent from 6.04 percent , although the monthly inflation figure slightly increased to 0.11 percent from 0.04 percent.

Bank Indonesia (BI, the central bank) was expected to lower the BI Rate by 25 basis points to 6.75 percent, he said.