Officials Debate Tighter Restrictions, Some Push For Full Lockdown

Spot USD/MYR gapped higher as onshore trading got under way in Kuala Lumpur and the rate caught up with overnight bid in USD as well as reports suggesting that Malaysian officials have discussed implementing a full lockdown. USD/MYR trades +58 pips at MYR4.1455 as we type.

• Malaysia declared a record surge in new Covid-19 cases Wednesday, with 6,075 officially confirmed infections. Malaysia's richest state & economic powerhouse Selangor remained the main contributor to the nationwide tally. Selangor Chief Min said that the state would welcome stricter curbs, including a total lockdown, but the decision will be made by the federal gov't.
• The Straits Times reported that top gov't officials have debated tightening restrictions under the nationwide MCO. The piece noted that "some quarters are pushing for rules similar to the first MCO implemented in March 2020 - which barred all non-essential activities - to be announced this week despite fears that it would torpedo hopes of an economic rebound after last year's recession," with an official with the development agency warning that "a full lockdown may kick in as early as this Friday (May 21)".
• The Customs Dept left maximum crude palm oil export tax at 8%, unchanged after January hike.
• Looking ahead, Bank Negara Malaysia will provide an update on foreign reserves tomorrow.
• From a technical perspective, following a breach of resistance from Apr 9 high of MYR4.1454, bulls keep an eye on Mar 31 cycle high, located at MYR4.1590. Conversely, bears need a retreat under the 50-DMA at MYR4.1236 to get some reprieve.