May 16 (Bloomberg) -- Indonesian inflation will probably rise to 6 percent, fueled by a weaker currency, forcing an increase in key interest rates, the head of the central bank said.

``Inflation will probably rise to 6 percent, which will lead us to increase interest rates,'' Bank Indonesia Governor Burhanuddin Abdullah told reporters during the annual meeting of the Asian Development Bank in Jeju, South Korea. ``That is very much a normal response.''

Burhanuddin added that the central bank will ``wait for quite some time'' before raising interest rates.

A decline in the rupiah against the dollar is fueling inflation by raising prices of imported goods, he said. Indonesia's inflation rate accelerated to 5.9 percent in April, close to the government's 6 percent forecast for the year.

The rupiah fell 3.6 percent against the dollar last week, the biggest drop since July 26, 2002, as the U.S. currency gained on expectations the Federal Reserve will raise interest rates as soon as next month. The rupiah closed at 9,033 to the dollar on Friday, its lowest in nearly 14 months.

A rupiah weaker than 9,000 to the dollar ``will hit inflation because Indonesia is dependent on imports of many things, including food products,'' Burhanuddin said.

The central bank won't try to manage the rupiah's exchange rate except to prevent sudden swings, he said.

``I am very comfortable'' with the level of the rupiah, Burhanuddin said. The exchange rate is ``up to the market,'' he said. ``The central bank is aiming at reducing the volatility.''

Editor: Wellisz

To contact the reporter on this story: Amit Prakash in Jeju, South Korea at aprakash1@bloomberg.net

Last Updated: May 15, 2004 23:14 EDT