(Bloomberg) -- The Indonesian rupiah may advance to its highest level against the dollar since October in the next six months as an improving global economy spurs foreign investors to buy the nation’s assets, according to Barclays Capital.

The rupiah, the biggest gainer this month among Asia’s 10 most-active currencies outside Japan, may also appreciate on prospects President Susilo Bambang Yudhoyono will be re-elected this year following parliamentary elections on April 9, analysts at Barclays, the world’s third-largest currency trader, wrote in a report today.

“Our base-case scenario, which calls for an improvement in the global macro outlook and a decline in risk aversion in the second half of 2009, may help attract capital flows to Indonesia,” Singapore-based analysts Sailesh Jha and Shyam Ramachandran said in the research note.

Indonesia’s currency will strengthen to 10,000 in the next six months compared with a previous forecast of 15,500, the report said. It will reach 11,500 in the next three months versus a prior estimate of 14,500.

Barclays’s forecast is more bullish than the median estimate of 12,000 by the end of the third quarter in a Bloomberg News survey of 20 analysts.

The currency climbed 1.9 percent to 10,903 per dollar as of 11 a.m. in Jakarta, the biggest gain since Jan. 7, according to data compiled by Bloomberg. The currency appreciated 6 percent this month.

Politics Positive

President Yudhoyono’s Democrat Party is leading the April 9 parliamentary elections with 20.4 percent of the vote, according to returns so far from the Indonesian Survey Institute. That’s almost three times the tally in 2004’s election. The final result will be released on May 9.

The Democrats’ gains may help Yudhoyono’s own re-election bid in July. The 59-year-old president may also have better luck attracting coalition partners, enabling him to enact measures to revive economic growth.

The president has seen through reforms that saw the economy expand more than 6 percent in the past two years, the fastest pace since the 1997-1998 Asian financial crisis. He has instigated new laws to attract money from abroad, including tax breaks on investments.

“In our view, recent political developments are positive for the Indonesia rupiah,” according to the Barclays report.

Southeast Asia’s largest economy may expand by 4 percent to 4.5 percent this year, based on encouraging growth in the first quarter, Finance Minister Sri Mulyani Indrawati said yesterday.

Indonesia’s first-quarter growth of above 4 percent shows “some resilience” against the global slowdown, Sri Mulyani told reporters in Jakarta.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.