Rupiah traded at the level of 9,885 to the dollar in inter-bank transactions gaining from 9,890 in previous day`s close .
Analysts attributed the gain to Bank Indonesia raising its benchmark interest rate (BI rate) on Thursday to 6 percent from 5.75 percent.
Bank Indonesia`s decision to raise the BI rate is aimed at propping up weak rupiah and to forestall the impact of oil fuel price hike on inflation,Trust Securities` chief researcher Reza Priyambada said.
The increase in the BI rate is effective enough to give greater strength to the domestic currency against the US dollar, Reza said.
The central bank has been aggressive in protecting rupiah by spending its US dollar on buying local currency in the market.
He said the rise in BI constituted a preemptive policy in response to inflation expectation with the plan to raise the subsidized oil fuel price.
Ruly Nova, a financial market observer from Bank Himpunan Saudara, said the increase in the BI rate is an attempt to help rupiah wriggle out from continuing under the dollar pressure.
He said demand for dollar is still high to repay foreign debts of private companies.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2013
