The Indonesian currency traded at Rp9,020 per dollar late Wednesday, up 100 points from the previous day`s closing at Rp9,120.
"BI`s intervention has enabled the local unit to strengthen to the level of Rp9,020 per dollar. But this level is something normal as it is what market players had expected earlier," money market observer Tony Mariano of Harvest International Futures said.
Unlike in previous months, demand for the US dollar at the end of this month was not too high, causing the rupiah to strengthen, he said.
Yet the rupiah`s strengthening would not last long due to the government`s plan to raise fuel prices which would drive up the inflation rate, he said.
"Fuel prices are likely to go up. Then the inflation rate will also rise so the rupiah will weaken again against the dollar," he said.
The rupiah`s strengthening was also driven by the composite share price index (IHSG) at the Indonesia Stock Exchange (BEI) which rose significantly by up to 2 percent on Wednesday evening, he said.
"As long as activities at the domestic stock exchange are positive the rupiah still has a chance to strengthen," he said.
The IHSG rose 81.65 points or 2.09 percent to 3.985,21 on Wednesday evening. The index of 45 blue chips strengthened 18.12 points or 2.69 percent to 692.44 points.(*)
Editor: Heru Purwanto
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