Malaysia’s stocks and currency dropped after the king announced a state of emergency that will remain until August. 1, as the nation steps up measures to control the spread of Covid-19 virus.
King Sultan Abdullah Sultan Ahmad Shah agreed to declare an emergency until Aug 01 following a request from Prime Minister Muhyiddin Yassin in a Monday meeting, the national palace said in a statement. If contaminations are brought under control, the measures could be lifted more quickly.
A state of emergency would permit for parliament to be suspended, meaning the government would have the power to present laws without approval. Elections are also expected be put on hold.
Succeeding the announcement, the U.S. dollar-Malaysian ringgit pair hit a high of 4.072 – or around 0.54 percent higher than the preceding close. The currency pair has since traded around 4.061, or 0.27 percent higher than Monday’s close.
Covid-19 cases have unprecedently spread across Malaysia after a local election in September, with new infections hitting a record-high last week. The administration has estimated daily cases to reach 8,000 by late March or late May, based on a predictive modelling analysis.
TD Securities (a Canadian investment bank and financial services provider) expects short-term pressure to stay on the rupiah as U.S. yields rise and inflows into local bond markets provisionally ease.
Muhyiddin has upheld that an election should only be held after the Covid-19 outbreak is under control. His effort to place the entire country under emergency in October — ahead of a major budget vote that crumpled as a confidence test — was snubbed by the king.
Malaysia has been in political chaos since March last year when Prime Minister Muhyiddin came to power without an election following Mahathir’s resignation and the breakdown of his reformist administration.
As per recent data, Malaysia has reported more than 138,200 cumulative cases of Covid-19 and 555 deaths so far, according to Hopkins.