The rupiah had been under persistent pressure through the end of August, trading at Rp10,920 per dollar, down 5.8 percent from one month earlier, or down 11.7 percent from late last year.
The local unit closed stronger at Rp11,350 - Rp11,515 per dollar on Wednesday and rallied to over Rp11,350 per dollar on Thursday.
Noting that the rupiah`s exchange rate is consistent with the nation's economic fundamentals, Bank Indonesia officials believe the increasingly stable rupiah will help boost exports and reduce imports and, consequently, lower the current account deficit.
Further, central bank officials said they would move forward with steps to stabilize the rupiah`s exchange rate based upon economic fundamentals.
Meanwhile, the inflation rate eased to 1.12 percent (mtm) or 8.79 percent (yoy) in August from 3.29 percent (mtm) or 8.61 percent (yoy) in July.
Bank Indonesia also predicted the inflation rate would decline in the coming months, with low inflation expected in September.
The downward trend of the inflation rate will be the result of a slowdown in domestic demand and the coordinating steps between Bank Indonesia and the government to keep the inflation rate in check.
Given the latest developments, Bank Indonesia predicted the inflation rate would reach 9.0-9.8 percent this year and fall to 3.5-5.5 percent in 2014.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2013
