Malaysian Currency, Stocks Decline As Parliament Remains Deadlocked

A man wears a facemask, amid fears over the spread of the COVID-19 novel coronavirus, at Saloma Link Bridge in Kuala Lumpur, Malaysia, on March 12, 2020. Mohd Rasfan/AFP via Getty Images

Malaysia’s currency and stocks fell on Monday as the country’s election remains in deadlock and no party secured an outright majority in parliament.

The Malaysian Ringgit fell to 4.5780 against the U.S. dollar on Monday from 4.5480 at Thursday’s close, while the benchmark Kuala Lumpur Composite Index (KLCI) slid 1.5 percent in early trading.

Malaysian markets are anticipated to remain volatile until a new leader is appointed. The country faced its first hung parliament as no party won enough seats in the Nov. 19 election.

Pakatan Harapan (PH), a left-wing coalition led by opposition leader Anwar Ibrahim, won the most seats with 82. Former prime minister Muhyiddin Yassin’s pro-Malay Perikatan Nasional (PN) party won 73 seats.

Both leading parties sought alliances with key political parties in Sabah and Sarawak states, which collectively hold 56 of the 222 seats in parliament, to secure a majority. At least 112 seats were needed to form a new government.

The Malaysian King has granted rival coalitions until Tuesday to form a government.

The incumbent Barisan Nasional—a right-wing coalition led by former Prime Minister Ismail Sabri Yaakob’s United Malays National Organisation (UMNO)—suffered a huge defeat in the election, winning only 30 seats.

Malaysia’s two-time former Prime Minister, Mahathir Mohamad, 97, lost his long-held Langkawi constituency with only 4,556 votes, marking his first election defeat in 53 years. His right-wing Gerakan Tanah Air, established in August, failed to secure a single seat in the election.

Malaysian politician Anwar Ibrahim gives a news conference in Kuala Lumpur, Malaysia May 16, 2018. Reuters/Lai Seng Sin

Anwar’s PH campaigned on institutional reforms, including limiting the prime minister’s tenure to 10 years, regulating political funding, and separating power between the public prosecutor and the attorney-general.

The reformist party pledged to tackle corruption and encouraged all its candidates to declare their assets—a move not followed by other blocs.

The Malay-centric PN alliance promised to set up an anti-corruption court if it won the election. The party’s manifesto also focused on increasing youth representation in government and making foreign political donations illegal.

The country has faced political instability and three prime minister changes since the previous election in 2018, when Mahathir joined forces with Anwar and led PH to victory.

The PH rule led to a significant upheaval, as once-powerful UMNO leaders were jailed or brought to court for graft. Former Prime Minister Najib Razak was imprisoned in a case linked to the 1MDB saga. His wife, UMNO’s current chief, and several party leaders are also battling separate corruption charges.

Anwar, who was serving time on a sodomy charge at the time, was pardoned following the PH victory and would have succeeded Mahathir, but their government collapsed due to defections in February 2020.

Muhyiddin was then named prime minister under PH administration. He resigned in August 2021 after losing the majority in Parliament, and Ismail was appointed as his replacement, returning the premiership to UMNO.

Malaysia enacted an anti-hopping law in October to prevent political instability caused by party defection. But political observers said the law contains loopholes, such as the ability of political parties to change coalitions.

The Associated Press contributed to this report.