The relentless sale pushed the Singdollar down from around $1.28 per 100 yen to an 11-month low of $1.35 per 100 yen in just two days. The local unit also weakened against the US dollar, going above the psychological $1.54 level against the greenback last night.

In three weeks, the Singdollar has fallen around 9 per cent against the yen and 2 per cent against the US dollar.

The cause is an exodus of investors out of emerging market assets funded by highly popular low-interest yen loans, as fear grips stock markets, said currency analysts.

The exit from these assets and the rush back into the yen have contributed to weakness in Asian units, especially the Indonesian rupiah, Indian rupee and Malaysian ringgit. 'The Singdollar is a casualty of the region-wide sell-off,' said OCBC economist Emmanuel Ng.

'As the rest of emerging Asian currencies such as the South Korean won and Philippine peso tanked, the Singdollar was unfortunately caught in the crossfire.'

The won was one of the worst hit, diving 1.5 per cent against the greenback within a day.

DBS currency economist Philip Wee said: 'The Singdollar is under pressure, just like other currencies in the region.'

The yen also benefited from investors dumping European and US assets to repay their Japanese loans. The sell-off propelled it to a two-year high of 114 yen to the greenback last night.

However, the trajectory of emerging Asian units was nowhere as dramatic as those of the Australian and New Zealand dollars, which have been in a virtual free fall for two days.

Analysts were not surprised.

High interest rates Down Under have made the two countries popular destinations for yen-rich investors but they are now unwinding these investments in droves.

The turbulence has caused the Singdollar to appreciate sharply against both. In three weeks, it has gone from $1.34 against the Aussie dollar to $1.21 last night.

The Kiwi dollar has lost 14 per cent against the Singdollar in the same period. It bought $1.22 three weeks ago, but at one point last night, bought less than $1.05.

Market watchers are still expecting the Singdollar to lose more ground against the greenback.

'The last time the Singdollar hit $1.54 to the US dollar was in June, and the market then was nowhere near as chaotic as today. So we cannot rule out a further weakening of the Singdollar,' said Mr Ng.

Analysts are drawing up worst-case scenarios for currency market calamity, with some comparing the chaos to the fallout from 1998's collapse of the Long Term Capital Management (LTCM) hedge fund and 2001's WorldCom accounting scandal.

'To estimate how far the yen would go, based on the LTCM and WorldCom episodes, it could range from 113.7 yen to even 108 yen against the US dollar,' predicted Mr Wee.

ericatay@sph.com.sg