The Malaysian ringgit has hit a fresh record low against the Singapore dollar as several regional currencies continue to stay weak.
Just three days after softening to an all-time low of RM2.622 against the Singdollar last Thursday, the ringgit fell further to RM2.624 at the start of this week.
It was hovering around RM2.6207 yesterday.
The ringgit's persistent weakness is not so much due to the Singdollar gaining strength, but rather a massive outflow of capital from emerging markets back to developed markets, experts say.
Fundsupermart general manager Wong Sui Jau said: "Overall, in terms of fiscal and financial strength, (Singapore) is perceived to be stronger, so our currency has held up better and it looks as if the ringgit has been weakening against the Singdollar."
Oanda currency analyst Wu Mingze agreed, saying: "In terms of fundamentals, Malaysia is not looking great, but it's not that bad either compared to Thailand, the Philippines, or Vietnam."
Despite coming close to a current account deficit in the middle of last year, Malaysia's trade surplus has been improving, which will help to keep its current account in the black, he said.
The outflow of capital has hit emerging market currencies, with the Thai baht and Indonesian rupiah among those particularly hard-hit. One Singdollar was trading at 26.86 Thai baht yesterday evening. It was also equal to 9,611 Indonesian rupiah.
It is hard to say how long the volatility will last or how low the currencies could go, they added.
However, judging by past market swings, Mr Wu said it is likely that Malaysia's central bank will intervene if the ringgit depreciates to as low as RM3.80 against the US dollar. Today, one US dollar buys about RM3.33.
In the meantime, Asian currencies will have to ride out the volatility until confidence returns, said Mr Wong. "When we will hit bottom, it's hard to say. But confidence will return and the rebound could be quite fast."
Companies say the weak ringgit has not affected business much. Mr Mike Lim, executive director of bottling firm Dr Who, which imports some material from across the Causeway, said the weaker ringgit was a cushion against general rising costs in Malaysia. "But we don't expect it to stay weak very long," he said.