RUPIAH DROPS 20 POINTS ON PROFIT-TAKING ACTIONS

Jakarta, July 14 (ANTARA) - The rupiah tumbled 20 points at the Jakarta interbank spot market here early Tuesday.

The Indonesian currency traded at Rp10,200/10,210 per US dollar, down 20 points from Rp10,180-Rp10,190, as investors released the local unit to take profits after the rupiah rallied to below the level of Ro10,150 per US dollar.

Retail Banking Director of PT Bank Mega Tbk Kostaman Thayib said here on Tuesday the domestic money market was still negative toward the rupiah causing the local currency to depreciate.

The rupiah's depreciation over the past two days caused the local currency to drop to Rp10,200 per US dollar.

However, he believed the position of the rupiah was still quite sound as Bank Indonesia (BI, the country's central bank) was guarding the currency to prevent it from fluctuating extremely.

"We are optimistic that BI will stay in the money market to guard the local currency, so that its movement will not be at wide range," he said.

According to Kostaman Thayib, the rupiah was under pressure because investors were still waiting for the announcement of new cabinet line-up under the new administration of Susilo Bambang Yudhoyono (SBY) and Boediono being considered by observers as professional.

Therefore, both foreign and domestic investors only released the rupiah in small amounts, although the rupiah still has a big chance to strengthen, he said.

The rupiah depreciated because investors were worried over the plan of the United States to provide a new economic stimulus package which seemed to indicate the global economic crisis was not yet over, he said.

As a consequence, market players tended to buy the greenback more than the rupiah, despite Indonesia's sound economic indicators, he said.

But he said the rupiah's depreciation was still normal after it had earlier strengthened to nearly Rp10,000 per US dollar.

The rupiah is predicted to be able to reach the level of Rp9,500 per US dollar at the end of this year. ***2***