Jakarta, June 16 -- Indonesia must maintain strict fiscal discipline and regulatory certainty to lock in a recent rally in its currency and stock markets, a leading economic think tank said on Tuesday.

The Jakarta Composite Index (JCI) has the potential to hit the 8,000 milestone within the next 18 months, while the rupiah is projected to recover toward the 16,500 per U.S. dollar mark over the next two years.

Analysts at the Institute for Development of Economics and Finance (INDEF) warn that sustaining this momentum requires Jakarta to look beyond short-term market sentiment and focus on deep-rooted economic fundamentals.

"The government needs to maintain economic policy credibility through fiscal discipline, regulatory certainty, and...