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resident-elect Joko '€œJokowi'€ Widodo has called on all parties to maintain a conducive political climate after the local financial markets took another battering as investors appeared anxious over the country'€™s reform prospects.

On Wednesday, the rupiah weakened to an eight-month low, while the Jakarta Composite Index (JCI) suffered Asia'€™s steepest drop after a coalition of parties supporting losing presidential contestant Prabowo Subianto secured the chairmanship of the People'€™s Consultative Assembly (MPR) after an intense political battle that lasted over
15 hours.

'€œI'€™ve delivered a message to politicians and political elites that every single move and policy of ours is watched by the market and by the people, so when they respond negatively, that will be heard,'€ Jokowi told reporters after the opening ceremony of the annual Trade Expo Indonesia (TEI) event in Kemayoran, Central Jakarta. '€œBut they don'€™t listen,'€ he added.

Foreign investors posted a net sell of Rp 232 billion (US$1.9 billion) of Indonesian equities on Wednesday, dragging down the JCI to close at 4,958, or 1.5 percent lower than a day earlier.

The JCI was the worst performer among 13 countries in the world benchmark indices data compiled by the Indonesian Stock Exchange.

The rupiah weakened 0.4 percent to 12,241, according to the Jakarta Interbank Spot Dollar Rate (JISDOR). The rupiah might test the 12,500 per dollar level '€œin the short term'€, warned Tim Condon, the head of Asian research with ING Group.

John D. Rachmat, the head of equity research with Mandiri Sekuritas, predicted the JCI would further fall to 4,800 by the end of October.

On Tuesday night, the opposition group effectively took control of the House of Representatives and the MPR, raising concerns over whether Jokowi will be able to secure enough political support to carry out his reform programs.

The House has the power to reject the president'€™s programs while the MPR, which will inaugurate the president, has the ability to impeach him.

The last time Indonesia witnessed an intense battle between the House and the president was during 2000-2001, when former president Abdurrahman '€œGus Dur'€ Wahid was in charge and the JCI fell by 49 percent in 18 months, John noted.

'€œPolitics play a dominant role in determining the index in our current situation and it is inevitable,'€ said Kiswoyo Adi Joe, an equity analyst with Investa Saran Mandiri.

Sean Yokota, a currency strategist with Sweden-based bank SEB, said the rupiah'€™s fall was also due to the rise in the US dollar in the global financial market.

'€œToday, there is general US dollar strength and Malaysia and Singapore are selling off,'€ Sean said.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, hit the strongest level in four years this week on expectations that the US Federal Reserve could tighten its monetary policy faster than
expected.

The US dollar strengthening against emerging economy currencies '€œmay still have room to go'€, Mandiri Sekuritas economists led by Aldian Taloputra wrote in a note.

BI also warned that the faster-than-expected raise of the interest rate in the US might spell a '€œcontagion risk'€ to emerging economies, including Indonesia.