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SINGAPORE -- The rupiah led the gainers in a mixed Asian currency trading session on Tuesday, propped up by the broad weakness in the US dollar as well as expectations of a sustained rally in Indonesian bonds in the months ahead.

While the rupiah rallied more than a percent to near 11,000 per dollar and the Philippine peso made a smaller recovery, currencies such as the Thai baht and Singapore dollar were weaker.

That came against a backdrop of a retreat in the US dollar from a one-month high against the yen, despite the support provided by expectations the US government will unveil an enhanced economic stimulus package ahead of President-elect Barack Obama's swearing-in ceremony on Jan. 20.

Traders suspected the dollar's downside will be limited in the days to come, as the new US Congress convenes and discusses measures to deal with a worsening economy.

Trading in emerging Asian currencies has also picked up steam this week, after a subdued yearend holiday period.

The rupiah in particular would be supported, said analysts, by the rules introduced late last year to curtail speculation as well as likely increased government spending to prop up investment activity. The currency has come off lows near 13,000 struck late in 2008.

"The bond market itself is well-supported...Net bonds issuance is likely to be minimal amidst a likely subdued demand," said Enrico Tanuwidjaja, a strategist at OCBC Bank.

Political risk could weigh on the currency heading into parliamentary and presidential elections in Indonesia over the next few months, Tanuwidjaja said.

But market participants could price in optimistic expectations for Finance Minister Sri Mulyani Indrawati to continue in her job and for central bank deputy governor Miranda Goeltom to either retain her post or move to the trade ministry, he said.

OCBC Bank expects Indonesian bonds to be supported in 2009, which in turn would shore up the rupiah although a dramatic rally to levels on the stronger side of 10,000-per-dollar was unlikely.

"We tip their so-called "equilibrium" rupiah level of around 11,500-12,000 in the near-to medium-term," Tanuwidjaja said.

• Real estate, BPO to continue to grow
• Roxas pushes one-time tax rebate
• Manila seeks advice on new bond issue

• China wants new global monetary system
• Solons caution gov’t on privatization