The currency declined for a second day as the benchmark Straits Times Index slid 4.1 per cent on Wednesday, bringing losses this year to 46.8 per cent. The Singapore dollar was the second-worst performer today among the 10 most-active currencies in Asia outside Japan.

'There's a lot of fear about the slowdown that is coming this year and next,' said Mr Ho Woei Chen, an economist at United Overseas Bank, Singapore's second-largest bank. 'The Singapore dollar is taking its cue from the weakening of Asian currencies.'

Singapore's currency fell as much as 1.3 per cent to S$1.4998 against the US dollar, the lowest since September 2007, before trading at S$1.4987 as of 4 p.m. local time, according to data compiled by Bloomberg. The local dollar will decline to S$1.50 by the end of the year, Mr Ho said.

The MSCI Asia-Pacific Index of regional shares dropped 5.5 per cent after the Standard & Poor's 500 Index fell 3.1 per cent yesterday.

The Monetary Authority of Singapore on Oct 10 ended a policy favoring gains in the currency for the first time since 2003 after a government report showed the city-state fell into its first recession since 2002.