RUPIAH STRENGTHENS ON MARKET'S OPTIMISM ABOUT ECONOMIC GROWTH

Jakarta, Aug. 5 (ANTARA) - The rupiah strengthened against the US dollar in the Jakarta interbank spot market here on Wednesday morning as investors continued to buy the local currency on the market's optimism about Indonesia's economic growth.

The Indonesian currency traded at RP9,840-Rp9,850 per US dollar, up 50 points from Rp9,890-Rp9,900 per US dollar, at the market's close a day earlier.

The chance of the local unit to further move upward was still very big, as the foreign investment in the domestic market would be growing as the global financial crisis was decreasing, Fauzi Ichsan, an economist of Standard Chartered Bank, said here on Wednesday.

"We are optimistic that the rupiah's potential to strengthen further coinciding with the decrease in the global financial crisis," he said.

The rupiah's surge reflected that investors were getting positive toward the Indonesian macro economy which was supported by the July inflation rate at 0.66 percent.

The lowering inflation rate in July prompted investors to be confident that Indonesia could give them better profits than other Asian countries, he said.

With the lower July inflation rate, Bank Indonesia (BI, the country's central bank) would likely again cut its BI Rate by 25 points, he predicted.

"Banking sector is expected to lower their credit interests to boost debtors to look for new credits, given that the global growth in mid 2010 will be better," he said.

"We are optimistic that the rupiah will reach the level of Rp9,500 per US dollar at the end of this year," he said.