UPDATE 1-Rupiah weakens past 11,000 for first time since early 2009
(Adds comments, details and background)
* Corporate dollar demand keeps weighing on rupiah
* Record trade deficit in July is latest worry
* Central bank continues to intervene - traders
SINGAPORE, Sept 3 (Reuters) - Indonesia's rupiah weakened past the psychologically important level of 11,000 per dollar on Tuesday, for the first time in more than four years, as the market fretted after the government reported a record monthly trade deficit.
The rupiah's indicative prices lost 0.7 percent to 11,050 per dollar, its weakest since April 2009.
Monday's announcement that Indonesia's trade deficit in July soared to $2.31 billion, nearly triple the June level, was the latest in a series of blows to the currency, which has shed nearly 13 percent against the dollar this year.
The July deficit makes some analysts and traders worry that Indonesia's current account deficit, which widened sharply in the second quarter, could get bigger this quarter, even though the central bank expects it to narrow.
While the rupiah slipped again on Tuesday, Indonesia's benchmark stock index rose 1.5 percent, erasing most of Monday's decline.
The latest fall for the rupiah, which shed 0.6 percent on Monday, stemmed from dollar demand from local companies in thin liquidity.
Forward markets on Tuesday pointed to further depreciation in the rupiah, with one-month non-deliverable forwards (NDFs) to the dollar weakening to 11,720.
The spread between the spot rate and the NDFs widened to 655 basis points. The one-month offshore/onshore forward spread increased to 610 bps.
Tuesday's spreads were the highest since Aug. 27, when they reached their widest since the global finance crisis in 2008.
Scotiabank, in a client note, said the rupiah still faces "significant negative speculative strain", adding that the currency "is not yet out of the woods by any stretch of the imagination."
According to traders, the rupiah has periodically traded weaker than 11,000 since late August, as banks in Indonesia bought dollars above that for their local corporate clients. However, Bank Indonesia often discouraged dealers from posting on electronic trading platforms price levels weaker than 11,000.
On Tuesday, screens showed 11,050 rupiah to the dollar, but the rupiah was traded weaker than that level, according to dealers.
"BI cannot fight the market," said a Jakarta-based trader, referring to Bank Indonesia letting the rupiah weaken below 11,000 in the interbank market.
The central bank has been providing dollar liquidity and, since June, has raised its benchmark interest rate by 125 basis points to support the rupiah.
But deteriorating economic fundamentals could not stop foreign outflows, putting pressure on the currency.
The rupiah, along with the Indian rupee, are seen as especially vulnerable to anticipated reduction in the Federal Reserve's quantitative easing. Both India and Indonesia are struggling with growing current account deficits, slowing economic growth and resistance to implementing much-needed reforms.
Foreign investors have dumped a net 5.9 trillion rupiah ($538.08 million) of Indonesian stocks between Aug. 1 and Sept. 2, according to Thomson Reuters data.
During August, foreigners also reduced bond holdings by 1.8 trillion rupiah, the government data showed.
(Editing by Richard Borsuk)