The ringgit's startling fall left some Singapore businesses in Malaysia fearing a repeat of the 1997 Asian financial crisis is looming.
Take home furnishings boss Chan Chong Beng. When he signed contracts three months ago to deliver carpets and wallpaper to his Malaysian clients, the ringgit was about 2.69 to one Singdollar.
"By the time we collected the money, it was over three (ringgit) to a dollar. We didn't expect it to go so steep! That easily takes off 15 per cent of our net profit," said Mr Chan, who heads Goodrich Global.
Contracts sealed in Malaysia have traditionally been denominated in ringgit, a practice that is hard to change despite the currency market volatility around the world. Malaysian firms have been less willing to denominate the contracts in Singdollars, added Mr Chan.
To be sure, the divergence between the two currencies has never been this sharp: just five years ago, the Singdollar was equivalent to 2.30 ringgit. Fifty years ago, the two currencies were on a par.
But the ringgit has shed 20 per cent in value over a year as the commodities-exporting nation suffers a prolonged oil price rout and brewing political turmoil. As of 8pm last night, one Singdollar could buy 3.0356 ringgit. The Malaysian currency had weakened briefly to as much as 3.05 ringgit to one Singdollar in the morning.
"The signs of a crisis are quite imminent. In 1997, it was something like this," said Mr Chan.
But analysts are more sanguine, noting that firms today are much less exposed to United States dollar debt. "This is not a repeat of 1997. Most corporates across Asia today are more well-diversified in their funding," said Credit Suisse senior currency strategist Heng Koon How.
And while the weak ringgit and rupiah point to Malaysia and Indonesia having the worst foreign reserve metrics across Asia, reserve ratios across the rest of the region are much more robust than in 1997, Mr Heng added. So while traders in the import and export game may have to revise their business models, other firms are not deviating from their growth plans. "In the consumer space, it's business as usual," said Sakae Holdings chairman Douglas Foo. "The fundamentals in the country are still sound, so we continue to look for good sites to expand. The weaker ringgit impacts our financial statements but in reality, we don't realise the losses because we're not taking the money out of the country."