Malaysia's main opposition leader Anwar Ibrahim, taking refuge at the Turkish embassy after saying his life was in danger, filed a defamation suit on Monday over fresh accusations that he committed sodomy.
The sensational developments, almost a repeat of the country's worst political crisis 10 years ago, is further roiling waters muddied since polls on March 8 that dealt Prime Minister Abdullah Ahmad Badawi's National Front coalition the worst electoral drubbing in Malaysian history.
The key stock index fell 0.7 percent at the midday break on the news that can only add to an uncertain outlook and will likely cloud policy-making at a time when rising food and fuel prices are stoking public discontent.
Investors have been dumping the ringgit as well. "Ongoing political upheaval is weighing on the ringgit," said financial markets consultancy IDEAglobal.com.
"Thus US dollar buying remains attractive as investors have been shipping out investments to elsewhere in Asia."
Malaysian Second Finance Minister Nor Mohamed Yakcop played down those concerns. "At the end of the day, what matters is the economic fundamentals despite the challenges," he told reporters. "I am confident we will do very well."
Anwar, 60, fled to the Turkish embassy in a Kuala Lumpur suburb on Sunday morning, 12 hours after the accusations surfaced, saying he had received death threats.
His wife, Wan Azizah Wan Ismail, said Anwar would leave the embassy if the prime minister personally guarantees his safety. "He will cooperate with the police," she said. "These are all lies. We have been through this before."
Home (Interior) Minister Syed Hamid Albar said Anwar's life was not in any danger. "He should be able to discern between reality and play-acting," he told reporters at parliament.
"Anwar went into the Turkish embassy on the pretext of talking to the ambassador, but he never came out."
On Monday, Anwar's lawyers filed a defamation suit against his aide-turned-accuser, 23-year-old Saiful Bukhari Azlan, one of the lawyers said. It asserts the police report filed against him was an abuse of due process of law.
Anwar said he fled to the embassy at the invitation of the Turkish ambassador. His aides said other embassies made similar offers but Anwar chose Turkey because he is an economic adviser to the Turkish government.
Foreign Minister Rais Yatim said he would summon the Turkish ambassador on Monday for what he said was interference in Malaysia's internal affairs.
The latest developments echo, albeit less acutely, the kind of crisis the country endured a decade ago. Anwar was sacked as deputy prime minister in 1998 in the midst of the Asian financial crisis after leading a "reformasi" (reform) movement against then premier Mahathir Mohamad. He was then jailed for sodomy and corruption. The Supreme Court overturned the sodomy conviction in 2004.
Anwar has seen a revival of his fortunes after the opposition alliance won control of five of Malaysia's 13 states and denied the National Front coalition its traditional two-thirds majority.
In April, he became eligible again to seek political office after the expiry of a five year-ban on holding office over the corruption conviction.
Anwar maintains he has lined up enough defections from the ruling coalition -- he needs 30 -- to bring down Abdullah's government and said he would do so in mid-September.
The father of six children said in a statement the charges were "completely fabricated" and politically motivated. "I have been told that my assassination has not been ruled out as a means to subvert the people's will and bring an end to the transformational changes taking place in Malaysia," he added in the statement.
Prime Minister Abdullah said the government was not involved