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ressure on the rupiah will likely be well contained this year, as the currency is not expected to depreciate much from its current value despite fears it could breach 13,000 per US dollar in the short term, Bank Indonesia (BI) has predicted.

BI Governor Agus Martowardojo forecast on Monday that the currency will trade at a range of 12,200 to 12,800 per dollar throughout 2015 on the back of sustained capital inflows to Indonesia, a significantly stronger estimate compared to many analysts'€™ rupiah forecast of 13,000 per dollar for this year.

'€œWe will safeguard the rupiah so that it will not swing too excessively, which could in turn spell negative repercussions to our macroeconomic stability,'€ he told lawmakers in a House of Representatives hearing on Monday.

The rupiah assumption in the revised 2015 state budget, which forecast the currency to average at 12,200 per dollar this year, was realistic and in line with the central bank'€™s range, the BI governor said.

Finance Minister Bambang Brodjonegoro, however, is expected to revise the rupiah assumption weaker to Rp 12,500 against the greenback '€” making it more aligned with the central bank'€™s forecast.

'€œThe latest [market] development is heading toward Rp 12,500 [on average for 2015],'€ Bambang said. '€œSo it is likely that deliberations at the House will head there.'€ The budget is expected to be passed next month.

Investment banks such as BNP Paribas, Goldman Sachs and Morgan Stanley have predicted the rupiah to weaken to 13,000 per dollar this year as tighter monetary policy in the US is expected to reverse capital flows from Indonesia to the world'€™s largest economy.

Barclays Bank and ANZ Bank estimated the currency to weaken to 13,250 per dollar in 2015, as they expected sluggish recovery in Indonesia'€™s current-account deficit, the major worry among foreign investors that has so far sparked bearish sentiment on the rupiah.

The rupiah traded at 12,616 per dollar on Monday, according to the Jakarta Interbank Spot Dollar Rate (JISDOR). It fell 1.7 percent throughout last year, extending its loss after falling 26 percent in 2013.

Due to its large current-account deficit, Indonesia would need to attract around $2 billion in portfolio inflows a month just to keep the rupiah stable, ANZ Bank analysts led by Khoon Goh wrote in a research note.

'€œReality has started to dominate as markets refocus on the fundamentals,'€ Goh argued. '€œA still large current-account deficit means ongoing reliance on portfolio inflows.'€

The annual deficit might swell to between 3.3 percent and 3.5 percent of gross domestic product (GDP) this year, compared to 3 percent last year, as the new government'€™s planned growth-generating infrastructure projects would swell imports, Agus told reporters after his meeting with lawmakers.

The economy might need a relatively weak currency to narrow its current-account deficit, BI senior deputy governor Mirza Adityaswara has said.

Although the rupiah recently weakened against the dollar, it actually strengthened against the currencies of Indonesia'€™s major trading partners such as the Japanese yen or the euro.

The rupiah'€™s real effective exchange rate (REER) '€” a competitiveness level of the rupiah relative to other major currencies '€” recorded a 9 percent appreciation through the end of November.

'€œIt remains necessary that the rupiah refrain from appreciating on real effective basis,'€ commented Sacha Tihanyi, a currency strategist with Scotiabank in Hong Kong. The rupiah should be managed in '€œcontrolled trend depreciation'€, he said in an email.

'€” Esther Samboh, contributed to this story