The rupiah edged up 46 points to close at 11,364 per dollar on Tuesday evening from 11,440 per dollar earlier.
"The improving economic fundamentals remain the main factor for the rupiahs continuing rally against the dollar," Bank Mandiris money market analyst, Rully Arya Wisnubroto, said.
The inflation rate is expected to fall this year after remaining high last year due to the fuel price hike, he explained.
"On the other hand, although Indonesia reported a trade deficit in January 2014, the market has not been affected by it and believes that the countrys trade balance will improve in the future," he added.
The market is optimistic about the measures taken by the government and the central bank to lower the countrys trade deficit, he said.
"Bank Indonesia is trying to deepen the money market by issuing a number of new instruments to support the local currency," he stated.
He added that the rupiahs appreciation was also driven by the inflow of foreign investments in domestic shares and state bonds.
"The amount of foreign investments in shares has reached about Rp10 trillion and bonds Rp21 trillion, since early this year," he said.
According to Bank Indonesias mid-rate on Tuesday, March 11, the rupiah strengthened to Rp11,384 per dollar from Mondays close of Rp11,449 per dollar.(*)
Editor: Heru Purwanto
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