TEMPO.CO, Jakarta - The rupiah interbank exchange rate went up by 47 points on Tuesday evening, to close at Rp12,122 per United States (US) dollar at the end of trading—up from its previous position at Rp12,169 per US dollar.

"The rupiah is gaining against the US dollar in anticipation for the release of September's inflation figures by the Central Statistics Agency (BPS) on October 1, 2014," said an analyst at Bank Himpunan Saudara, Rully Nova, in Jakarta on Tuesday.

According to Rully, September's inflation figure is well under control, which means that the 2014 inflation target of 4,5 percent—give or take one percent—can still be reached.

The price hike of 12 kg LPG canisters has not significantly contributed to the inflation as previously predicted.

Rully believes the gains may be reversed as there is enough positive sentiments surrounding the buzz generated by the possibility of a Fed rate hike.

"A US interest rate hike will push investors to seek out US dollar denominated assets because it promises higher yields. Expectations are high as the US economy is recovering better than previously expected," said Rully.

An analyst at Monex Investindo Futures Zulfirman Basir added that the rupiah's gains are held back by negative sentiments in Indonesia's political atmosphere. Many investors are unsure of the capability of the next Indonesian President to realize his projects due to the lack of political support in the House of Representatives (DPR).

Furthermore, many investors choose to remain cautious in anticipation of the release of Indonesia's manufacturing and trade data, which is due on October 1, 2014.

Bank Indonesia's middle rate on Tuesday stands at Rp12,212 per US dollar, down from its previous position at Rp12,120 per US dollar.

ANTARA