Indonesian share prices closed up 2.28 percent at a record high on Wednesday on hopes that interest rates will fall and with sentiment further boosted by a stronger rupiah, dealers said.
They said market movers Telkom, Indosat, Bank Mandiri and Bank Rakyat Indonesia led the gains after the latest sign that US rate hikes could be coming to an end, paving the way for lower interest rates here.
Bank Indonesia's move Wednesday to shave one basis point from its one-month benchmark rate to 12.74 percent bolstered investor hopes of more rate cuts in the weeks ahead, they added.
The Jakarta Stock Exchange composite index rose 27.009 points to 1,211.699, breaking its previous record close of 1,192.203 on August 3, on volume of 1.76 billion shares worth 2.10 trillion rupiah (217.39 million dollars).
Gains led declins 98 to 37, with 57 stocks unchanged.
The rupiah was at 9,660/9,670 to the dollar compared to Tuesday's 9,725/9,735.
Foreign exchange dealers attributed the rupiah's rise to regional weakness in the dollar amid indications the uptrend in US interest rates may soon come to an end.
"If the Fed cools down on its interest rate hikes that should indicate that local rates may not have to rise again," said Mega Capital Indonesia analyst Hendry Andrean.
He said the drop in December inflation, the stronger rupiah and Wall Street's overnight rise together gave the market a strong boost.
He said the slew of positive news plus the so-called January effect, a traditional rally at the start of the year, gave investors added confidence to buy up stocks.
Telkom added 50 rupiah to close at 6,200, buoyed by the stronger local currency, while Indosat climbed 150 rupiah to 5,850. Banks were higher, benefiting from hopes of a continuing easing in domestic interest rates. State-run Bank Mandiri rose 80 rupiah to 1,790 and its peer Bank Rakyat Indonesia added 175 rupiah to 3,350. Bank Central Asia gained 200 rupiah to finish at 3,675 and Bank Danamon rose 225 rupiah to 5,025.
Car dealer Astra International rose 300 rupiah to 10,500 as a stronger rupiah will mean lower car import costs for the company, while its heavy equipment unit United Tractors added 175 to 3,875. Easing interest rates would give a boost to its car financing business.