The Indonesian rupiah will be able to level out at 9,200 against the U.S. dollar toward the end of the year on the country's macroeconomic improvements of stronger foreign exchange reserves, the central bank has said.

"The rupiah's stability will be supported by a better macro economy, the attractiveness of rupiah-based assets, and the easing of U.S. rates," Bank Indonesia (BI) Governor Burhanuddin Abdullah was quoted Tuesday by The Jakarta post newspaper as saying.

The rupiah has over the course of the year indeed been appreciating against the greenback, by 5.46 percent so far, averaging 9,183 per dollar up until the period ending August.

It started this week slipping to 9,127 a dollar, from last Friday's 9,120 closing.

The rupiah has been gaining mostly from a capital inflow since the year's beginning, as global portfolio investors locked in on Indonesia 's capital markets to profit from their high yields.

Inflation has recently slowed down however, clocking in at 14.9 percent in August, allowing BI to cut rates to 11.25 percent. This, however, still leaves an attractive spread of 6 percentage points between the U.S. Federal Reserve's 5.25 percent key rate.

Lower inflation also bodes well for the rupiah's value.

Growth, meanwhile, rebounded to 5.2 percent in 2006's second quarter, from 4.6 percent in the first, after slowing down for five straight quarters. The growth was in part supported by stronger exports, which in turn strengthened Indonesia 's reserves and again the rupiah.

Burhanuddin said the country's reserves may remain at 42 billion dollars until the end of the year, up from 34.7 billion last year.

"It will stand at 39.5 billion dollars if we decide to pay the second tranche of debt repayment ahead of schedule to the International Monetary Fund (IMF)," he said in a hearing with legislators Monday.

Source: Xinhua