Concerns Mount Over Potential For Tightening Restrictions In Malaysia

Spot USD/MYR has added 33 pips thus far, punching through the prior intraday high, and last trades at MYR4.0465. The ringgit has been undermined by speculation that Malaysia could tighten Covid-19 restrictions amid a continued surge in new cases.

• Straits Times sources said that the gov't "is preparing to shut down most of its economy if coronavirus cases continue to surge (...) after existing movement controls have so far failed to contain the spread of infections." If the situation does not improve, the Health Ministry will push for shuttering all economic activity save for essential services after the current MCO expires on Feb 4. Meanwhile, "other government ministries are seeking a compromise, and believe limited business activities can continue in tandem with essential services."
• Malaysia declared a record increase in new Covid-19 cases (+4,275) on Saturday, with the count easing to +3,346 on Sunday. Nine new clusters of infections were reported on Sunday, eight of them were linked to workplaces.
• PM Muhyiddin chaired a meeting of Perikatan Nasional presidential council, which involved a "lengthy discussion on the Emergency Order," with the briefing from gov't off'ls "well received."
• As a recap, Malaysian FinMin Zafrul told BBG before the weekend that the economic growth will probably fall closer to the lower end of the forecast range this year.
• Bulls need a clearance of the 50-DMA at MYR4.0582 before targeting Jan 12 high of MYR4.0760. Conversely, a dip through Jan 21 low of MYR4.0290 would bring Jan 4 low of MYR3.9957 into play.
• Looking ahead, Malaysian trade data will be published on Friday.