Malaysia Extends MCO To All States But One In Lead-Up To BNM MonPol Decision

USD/MYR has edged lower and last sits -37 pips at MYR4.0465, unfazed by the latest expansion of Covid-19 restrictions in Malaysia and the upcoming BNM MonPol decision.

• Malaysia expanded its Movement Control Order (MCO) to the states of Kedah, Perak, Negeri Sembilan, Pahang, Terengganu, and Perlis in a bid to stop the spread of new Covid-19 infections. Sarawak remained the only state not covered by the MCO. New restrictions were introduced for two weeks from Jan 22 to Feb 4.
  • Bernama cited FinMin Tengku Zafrul as suggesting that the price tag on the latest restrictions on movement will reach MYR600mn/day. The FinMin noted that the first lockdown costed Malaysia as much as MYR2.4bn/day, with current curbs leaving five essential sectors open.
  • Malaysia's Director-General of Health estimated that the number of new Covid-19 cases will continue to increase before steadying in one week's time.
• The BNM will deliver its first monetary policy decision of 2021 later today. Consensus is split as to whether policymakers will trim the Overnight Policy Rate by 25bp.
• Bears look for a dip through Jan 15 low of MYR4.0325 before targeting Jan 4 low of MYR3.9957. Conversely, a rally above the 50-DMA/38.2% recovery of the Nov 4 - Jan 4 slide at MYR4.0636/4.0640 would expose Jan 12 high of MYR4.0760.
• Looking further afield, Malaysian CPI report is due Friday.