The inter-bank exchange rate of the currency appreciated by 217 points to Rp11,203 against the US dollar from Rp11,420 on Monday.
"The seriousness of the government to reduce the country`s current account deficit is viewed in a positive light by players in the money market. This is the reason why the Indonesian currency appreciated," said Ruly Nova, who works at Bank Himpunan Saudara, on Tuesday.
He mentioned that the government will continue to increase exports to reduce the current account deficit.
The Fed`s planned stimulus reduction by US$10 billion, meanwhile, would meet market expectations, he added.
"If the reduction reaches US$20 billion, for example, the money market will certainly fluctuate and the rupiah will be depressed further," he said.
He added that the Fed will continue with its stimulus policy as US economic data has not reached the expected level.
Bank Indonesia`s middle exchange rate on Tuesday fell to Rp11,451 from Rp11,423. (*)
Editor: Heru Purwanto
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