Asia's troubled currencies took a pounding on the first day of 1998 trading yesterday, as regional financial turmoil entered its seventh month with no relief in sight, dealers and analysts said.

The Malaysian ringgit, Philippine peso and Thai baht were sold down to new lows against the dollar while the Indonesian rupiah skirted the sensitive 6,000 level against the US currency.

The fresh weakness came amid market jitters following warnings by regional leaders in new year messages that their economies would get worse in 1998 before any recovery.

"The rupiah weakness caused the other currencies to fall in the morning while in the evening, the ringgit dictated play," said Mr Nizam Idris, analyst with British financial house, IDEA.

The ringgit dived to an all-time low of 3.9525 against the dollar, even as Kuala Lumpur moved to streamline financial institutions following a rapid decline of its currency, which had closed on Wednesday at 3.8750. There was no currency trading on Thursday because of the New Year holiday.

"The market perception is that some of the mergers could be forced upon (financial institutions)," Mr Nizam said.

The dollar has appreciated against the ringgit by more than 50 per cent since July 2nd when Thailand ran out of reserves and allowed its baht to fall freely, triggering a region-wide currency turmoil that overwhelmed Asian economies. South Korea was the last key economy to be hit by the turmoil and is now under intensive care with the International Monetary Fund.

Dealers said the catchword when markets opened yesterday after the New Year break was "just buy the US dollar when it dips".