Early trade saw USD/MYR pull back from...>

DOLLAR-MYR: Early trade saw USD/MYR pull back from multi-month highs printed

yesterday as a combination of Covid-19 worry & domestic political turmoil

weighed on the ringgit. However, the rate has pared most losses since and now

changes hands -5 pips at MYR4.2260. A break above yesterday's peak at MYR4.2271

would return focus to the Sep 3 high at MYR4.2297. On the flip side, bears

continue to target Friday's peak at MYR4.1972.

- Monday's unexpected political shake-up left the ruling coalition in disarray.

The King accepted PM Mahathir's resignation (which automatically entailed the

dismissal of all ministers), but left him at the helm of the gov't in caretaker

capacity. Regional press has speculated whether Mahathir has the support of

enough MPs to form a new government, it remains a very close call.

- Malaysia's political tumult has drawn the interest of rating agencies. Fitch

noted growing downside risk from political uncertainty & anticipated a revision

to Malaysia's econ outlook in coming weeks. Moody's pointed to the impact on

private investment & warned that the country's GDP growth may slow to +4.2% Y/Y.

- BFM reported that econ stimulus package won't be unveiled Thursday as planned.