The Indonesian rupiah may rise 7 percent to Rp 8,500 versus

The Indonesian rupiah may rise 7 percent to Rp 8,500 versus the dollar by the end of the year on expectations Susilo Bambang Yudhoyono will boost economic growth after he becomes president on Oct. 20, JPMorgan Chase & Co. said.

"Hopes are high for a positive change in economic policy and for the continued progress of reforms," analyst Claudio Piron and economist Ong Sin Beng of JPMorgan in Singapore wrote in a note to clients.

Yudhoyono, who beat President Megawati Soekarnoputri in Sept. 20 elections, has vowed to create jobs and improve the schools and hospitals, encouraging fund manager to invest in the nation. Overseas investors bought a net US$62 million of stocks yesterday, the most since June 16, pushing the Jakarta Composite Index to a record. The index gained 15.3 percent this year.

Piron, who is head of Asian foreign exchange research, and Ong confirmed the report's contents in an interview. JPMorgan previously predicted the rupiah at Rp 9,500 at the end of the year, Piron said.

The government expects the economy to grow 4.8 percent this year and 5.4 in 2005.

"The domestic economy is showing encouraging signs of growth evidenced by the nine consecutive months of strong local cement sales and robust non-oil imports, which in August rose 51 percent," the report said.

The Indonesian currency fell 0.2 percent to 9,101 against the dollar as of 6:10 p.m. in Jakarta. -- Bloomberg