KUALA LUMPUR (Reuters) - A Malaysian opposition lawmaker has submitted notice for a motion of no confidence against embattled Prime Minister Najib Razak for Parliament on Monday (Oct 19), when he will face the toughest test of his political career over a graft scandal.

Mr Hee Loy Sian, a lawmaker in opposition leader Anwar Ibrahim's Parti Keadilan Rakyat (PKR), submitted the motion, citing Datuk Seri Najib's alleged failure to adequately explain a report in July that said investigators were looking into troubled state fund 1MDB and had found close to US$700 million (S$967 million) deposited in his personal bank account. Reuters has not been able to verify the report.

"Najib has affected the country's image in the world and caused investors to lose confidence in the government to the extent that the economy turns unstable, with the stock market diving badly and the ringgit (local currency) depreciating against the US dollar," Mr Hee's motion reads.

Monday's motion of no confidence is unlikely to succeed as the opposition is about 25 seats short of a majority, but adds to the pressure on Mr Najib.

The motion of no confidence against Mr Najib is listed as the third last item out of 28 motions for Monday, raising the chance there may be not enough time to hear the motion.

Mr Najib has denied taking any money for personal gain, while the South-east Asian nation's anti-corruption commission said the funds were a political donation from the Middle East.

Mr Najib's tight grip on his United Malays National Organisation (Umno) party has kept him in power despite public anger over alleged graft and financial mismanagement at strategic investment fund 1Malaysia Development Bhd (1MDB) , whose advisory board the Prime Minister chairs.

But that grip appears to be loosening, and his position could become precarious if he loses some crucial upcoming votes in parliament.

Malaysia's ringgit is one of the worst performing currencies in Asia this year, having fallen some 17 per cent in the year-to-date, weighed down by slowing demand in China, falling commodity prices and political issues surrounding 1MDB.

Former Malaysian prime minister Mahathir Mohamad and some leaders of the ruling party jointly demanded resolution of the 1MDB scandal on Oct 12 and condemned a crackdown on dissent, signalling a divide within Najib's own party.

Last week Malaysia's royal rulers made an unprecedented statement saying the government's failure to give convincing answers on 1MDB may have resulted in a "crisis of confidence".