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Malaysia stocks, ringgit fall when the king declares Covid state of emergency

A health worker wearing personal protective equipment walks past an alley with a mural illustrating medical fronts outside Clinic Ajwa in Shah Alam, Malaysia.

Annice Lyn | SOPA images | LightRocket via Getty Images

SINGAPORE – Malaysia’s shares and currency fell on Tuesday after the king declared a state of emergency that lasts until August 1

as the country intensifies measures to curb the spread of Covid-19.

Following the announcement, the US-Malaysian ringgit pair reached a high level of 4,072 – or about 0.54% higher than the previous close. The currency pair has since traded around 4.061 or 0.27% higher than Monday’s closing.

Meanwhile, the benchmark FTSE Bursa Malaysia KLCI Index fell around 1.45% from the previous day.

A statement from the Malaysian language issued by the palace, translated by CNBC, said the “proactive step” was requested by Prime Minister Muhyiddin Yassin due to rising Covid infections in the country.

The state of emergency could end earlier than August 1 if the number of daily cases becomes under control and effectively lowered, the statement said.

In a televised speech following the publication of the statement, Muhyiddin said there will be no curfew and the civilian government and judiciary will continue to function. But parliament will be suspended and elections cannot be held for the entire period, he added.

The Prime Minister also said that Malaysia remains “open for business”, and the crisis period will give the country “the much-needed peace and stability.”

Muhyiddin has a razor-sharp majority in parliament and has been under pressure from his ruling coalition to step down and call for a speedy election.

He had also sought a state of emergency in October – a move that many analysts saw as an attempt to preserve his political status. The king rejected the request at the time.

Surge in Covid cases

The state of emergency comes after Malaysia’s case of Covid-19 rose in recent months. Last week, the number of reported daily cases jumped above 3,000 for the first time since the outbreak, according to data compiled by Johns Hopkins University.

According to Hopkins, Malaysia has reported more than 138,200 cumulative cases of Covid-19 and 555 deaths.

The move also followed Muhyiddin’s announcement a day earlier of a nationwide ban on interstate travel as well as a two-week shutdown in several states and territories beginning Wednesday.

“The situation today is really very alarming. Our healthcare system is under enormous pressure now than at any other time since the start of the pandemic,” the prime minister said in a televised speech on Monday.

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