The fallout from the devaluation of the Thai baht and Philippine peso has spread, with Malaysia's Bank Negara the latest central bank to bow to speculative pressure and refrain - for a time - from supporting its national currency.
The Malaysian ringgit, Indonesian rupiah, South Korean won and Singapore dollar weakened against the US dollar under selling pressure mounted by off-shore hedge funds as soon as markets reopened after the weekend.
Bank Negara let the ringgit slide to an 18-month low of M$2.5520 to the US dollar before eventually intervening, spurring a mild recovery to M$2.5360, down from Friday's close of M$2.5040.
Bank Negara is estimated to have spent between US$1 billion and US$3 billion of its foreign reserves propping up the ringgit in recent weeks.
Barclays Global Foreign Exchange chief currencies economist Desmond Supple said: 'They could not go on defending it at its previous level. It is fruitless to intervene in this kind of market. You are throwing good money after bad.' The rupiah also came under heavy pressure, with speculators making use of the wider trading bands announced by the Indonesian central bank after Friday's close to test the currency.
It fell to a low of 2,469 rupiah to the greenback from Friday's close of 2,438 rupiah before clawing back to 2,455 rupiah.
