Malaysia's Prime Minister Mahathir Mohamad has submitted his resignation to the king, according to the prime minister's office.
The resignation was submitted to the king at 1 p.m. local time on Monday, the statement by the prime minister's office said. It's unclear whether the Malaysian king will accept Mahathir's resignation and what will happen to the ruling coalition that he led, Pakatan Harapan.
In another surprise move, the 94-year-old also resigned as chairman of his own political party, Parti Pribumi Bersatu Malaysia.
Mahathir's decision to resign followed a weekend filled with speculation that the ruling coalition could lose power. Multiple local media, mostly citing unnamed sources, reported that Mahathir would shift allegiance by tying up with the opposition parties to form and lead a new government.
Following news of the political upheaval, the FTSE Bursa Malaysia KLCI Index extended its losses to close 2.69% lower on Monday, while the U.S. dollar strengthened by 0.84% against the Malaysian ringgit.
The country's central bank, Bank Negara Malaysia or BNM, said it was "closely monitoring conditions in the financial markets" after the latest political developments.
"While ringgit movements will continue to be market determined, BNM's market operations will ensure sufficient liquidity and orderly financial market conditions," it said in a statement.
Mahathir was Malaysia's prime minister from 1981 to 2003. He became premier again after winning the 2018 general elections against the coalition he once led, Barisan Nasional.
Since taking power again in 2018, Mahathir has faced pressure to set a timeline to hand over the reins to Anwar Ibrahim, who's supposed to be his successor.
Anwar was Mahathir's deputy in 1993 to 1998 before he was sacked, but the event launched Anwar's career as an opposition political leader. The two men patched up and formed an alliance again to take down former Prime Minister Najib Razak in the 2018 elections.
Over the weekend, local media reported that Anwar said that he had been betrayed by Mahathir's party and a faction within his own party, Parti Keadilan Rakyat.
But on Monday, local media reported that Anwar said he had appealed to Mahathir to stay on. The reports also cited Anwar saying Mahathir was not involved in the alleged attempt to form a new coalition government. Other reports pointed to a possible fallout within Mahathir's party, Bersatu, which led to the politician resigning as chairman.
After Mahathir's resignation, his party's president, Muhyiddin Yassin, announced it will withdraw from the Pakatan Harapan coalition.
Malaysia's Minister of Economic Affairs Azmin Ali subsequently announced that he and 10 other members of parliament will leave Parti Keadilan Rakyat — the Anwar-led political party under Pakatan Harapan — and form an independent bloc in the chamber.