Disillusioned investors bailed out of the Malaysian ringgit yesterday, sending it falling to a 26-year low after Malaysian Prime Minister Dr Mahathir Mohamad's weekend comments that currency trading should be curbed. The ringgit fell to M$3.10 to the US dollar, down 2 per cent from Friday's New York close. Traders expect it to next test M$3.15 to the dollar and say it could go as far as $3.25. Malaysia's stock market also tumbled in response to Dr Mahathir's comments, with the KLSE Composite Index shedding 3.4 per cent to 760.5 points on foreign selling. The ringgit recovered modestly to close Singapore trading at M$3.095, having touched $3.10. Its fall hit regional currencies, with the Indonesian rupiah breaking through 3,000 rupiah to the dollar despite moves to cut interest rates. The Thai baht slipped to 37.20 to the dollar ahead of tomorrow's no-confidence vote. A regional economist at Independent Economic Analysis in Singapore, Jimmy Koh, said: 'Investors are effectively saying, if you don't want us in the market, okay, we'll get out.' Dr Mahathir on Saturday dubbed currency traders 'immoral' and suggested currency trading should be limited to financing trade, and speculation banned. A later attempt to clarify the situation by Deputy Prime Minister and Finance Minister Anwar Ibrahim was seen as indicating a degree of government disarray. 'Where is the consistency?' Mr Koh said. 'They are contradicting one another.' While most fund managers and analysts do not expect Malaysia to carry out Dr Mahathir's threat to curb speculation in the ringgit, they cannot rule out the possibility. 'The risk premium is too high,' a leading currency analyst with a European bank said. 'People know that Dr Mahathir is currently dominating Malaysian ringgit policy.' He cited Dr Mahathir's recent move to curb short selling of stocks to drive out what he called 'racist foreign manipulators', only to do an about-turn days later after a barrage of criticism. Another Singapore-base fund manager said: 'The Malaysians have got a lot of people jittery. 'This is exactly the kind of news [the prime minister's comments] we as investors don't want to hear.' He said serious long-term foreign investors wanted to hear more about efforts to cut back projects and trim the country's current account deficit, and less in the way of rhetoric. US financier George Soros, who attacked Dr Mahathir as 'a menace to his own country' at the IMF-World Bank conference on Sunday, yesterday tried to quell their war of words. Mr Soros, who Dr Mahathir once described as a 'moron', told Asia Business News : 'I have no desire to have any kind of war, either of words or anything else. But when I am attacked the way I was attacked, particularly in the domestic Malaysian press . . . I have to respond.'