His appointment ends five days of unprecedented post-election crisis but could usher in a new instability with his rival, former prime minister Muhyiddin Yassin, challenging him to prove his majority in parliament.

Both men failed to win a majority in a Saturday election, but the constitutional monarch, King Al-Sultan Abdullah, appointed Anwar after speaking to several lawmakers. 

Anwar takes over at a challenging time. The economy is slowing and the country is divided after a tight election that pitted Anwar's progressive coalition against Muhyiddin's mostly conservative, ethnic Malay, Muslim alliance. 

Markets surged upon the end of the political deadlock. The ringgit currency posted its best day in two weeks and equities rose 3 percent.

The 75-year-old Anwar has time and again been denied the premiership despite getting within striking distance over the years. He was deputy prime minister in the 1990s and the official prime minister-in-waiting in 2018.

In between, he spent nearly a decade in jail for sodomy and corruption in what he says were politically motivated charges aimed at ending his career.

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