The problem was first reported here: https://www.wikidata.org/wiki/Wikidata:Project_chat#Cannot_add_an_alias . Basically any attempt to add a label, a description or an alias with a lowercase any character ending in \x85 in UTF-8 (Cyrillic х, Armenian Յ, Arabic م etc.) fails with an error message:
Could not save due to an error.
Malformed input: (alias here)
For example, adding an alias "Венк фон Венкхейм" to https://www.wikidata.org/wiki/Q830544 fails.
All other letters of Ukrainian alphabet, including uppercase Х seem to work correctly, only lowercase Cyrillic х is affected.
Same applies to some letters of other alphabets (Armenian, Bengali etc.) - see belowOther letters (not containing \x85 in UTF-8) do not seem to be affected
This is very critical (it affects capacity to edit Wikidata, as one or more (Armenian) letters of the alphabet cannot be used)