"Are Asian currencies and bourses dancing with joy because of the yen's surge last week? Not at all. The real world is more complicated than that," said Tetsuji Sano, economist at Nomura Research Institute's Asian Economic Research Group. After joint currency market intervention by the United States and Japan last Wednesday, the yen posted a staggering 8.9 per cent recovery from an eight-year low of 146.75 to the dollar last Tuesday, to a high of 133.72 in New York on Friday.

It was traded around 137.30 yen in Tokyo on Monday afternoon.

The relentless fall of the yen until the intervention had been widely blamed by global and regional bureaucrats and economists as the main cause for Asia's latest rounds of economic and financial turmoil, and was also said to be a factor challenging stability of the financial markets in LatinAmerica and Russia. However, currency traders said the impact on regional currencies and stock markets of the yen's surge following the joint action was "short-term and negligible."

"The market, which had temporarily switched the focus to the yen's slide, is now turning again to the very basics -- or the fundamental ills of the Asian economy," said Minori Takeuchi, vice president of the global trading division research group at Chase Manhattan Bank.

The yen's appreciation, in theory, makes products made in Japan less competitive on the global markets as it pushes up export prices of Japanese products. The main beneficiaries of a yen rise are therefore supposed to be countries that produce similar products to the Japanese, like South Korea and Taiwan.

In theory, growth in South Korea and Taiwan should cheer up the Philippine and Thai economies, which have close trade and economic ties with them, analysts said.

However, regional bureaucrats have admitted that the real impact of this theory is onlymarginal.

The Bank of Korea said in a research report that a one per cent fall of the yen against the dollar reduces South Korea's export by only 0.25 per cent on a quantitative basis.

A one per cent drop in the US gross domestic product, however, slashes Korean exports by 1.5 per cent, it said.

"A yen rise, as a supplementary factor, is one piece of good news for the region. But in itself it is far from enough to brighten up the gloomy picture of heavily indebted economies," Nomura's Sano said. The South Korean finance ministry has put the level of bad debts in the financial system at a staggering 118 trillion won ($84.29 billion), half of which may have to be written off.

South Korea's gross domestic product is a nominal 421 trillion won and the banking sector has net capital of only 60 trillion.

Furthermore, domestic demand in South Korea is shrinking because Seoul has failed to quickly reduce the high interest rates demanded by the International Monetary Fund in return for a $58.35-billionbailout package, Sano said.

The Korean won was quoted around 1,393/1,400 to the dollar on Monday -- up slightly from a week ago, but little changed from early June.

In Thailand, the central bank's lifeboat for financial institutions, the Financial Institutions Development Fund had suffered a 500-billion baht loss as of the end of March.

The size of the loss compares with Thailand's national budget of some 850 billion baht.

"A 40-50 per cent rise in rice prices over a year in Thailand is becoming a source of social instability, because the income gap has remained so wide," Sano said. Against this backdrop, "even if the yen shoots up to 100 per dollar, the Thai baht is not going to recover," said a currency trader at a US bank.