RUPIAH TUMBLES AGAINST DOLLAR LATE TUESDAY

Jakarta, Sept 2 (ANTARA) - The rupiah tumbled against the dollar in the Jakarta interbank spot market late Tuesday, causing worries to investors as the local unit droped closer to the psychological level of Rp9,200 per dollar.

If the rupiah hit the psychological level of Rp9,200 per dollar, it would continue to fall far beyond the level, PT Finance Corpindo President Director Edwin Sinaga said on Tuesday.

It would be difficult to control the rupiah's continued fall as negative internal factors would put strong pressure on its movement, he said.

"We believe the rupiah will weaken to beyond Rp9,200 per dollar if Bank Indonesia (BI) does not intervene in the money market," he said.

Ideally, the rupiah's exchange rate against the dollar should range from Rp9,100 to Rp9,200 per dollar as expected by the central bank, he said.

The rupiah came under pressure as foreign investors began to withdraw their capital from the domestic market and reinvest it in other more favorable markets, he said.

Even the issuance of state bonds received little support from the market as banks vied with each other in offering high interest on time deposits, he said.

In addition, the good prospects for US economic growth had also prompted investors to buy more dollars, he said.

Consequently, the US greenback strengthened against other Asian currencies, he said.

The rupiah would gain ground if BI raised its benchmark interest rate to curb the accelerating inflation rate, he said.

The rise in the key rate, locally known as BI Rate, was expected to boost an inflow of foreign capital, he said.