"There is a definite risk to the upside on dollar/yen," said Callum Henderson, analyst at Citibank. "The risk is that Japan still does not get the message, that still there is no sense of requisite urgency."

The yen was trading at 144.70 to the US dollar on Saturday compared with 144.35 at the end of the Asian session on Friday, and 141.65 on the previous Friday.

Nikko Securities said recent studies demonstrated at least a 50 per cent correlation between the dollar/yen rate and other Asian currency and stock markets, implying further weakness in the rest of Asia if the yen comes under increasing pressure.

Asian currencies were generally softer in line with the yen on Friday, even though some currencies such as the Korean won confirmed its recent independence by continuing to firm.

Most Asian stock marketsalso closed firmer on Friday.

Henderson said this decoupling could not be sustained with sudden yen weakness. If the yen scooted past 150 to the US dollar -- now dubbed the Rubin Line after US treasury secretary Robert Rubin, who authorised intervention to support the yen last month -- weaker Asian markets were expected.

"Hopefully that (break) will be avoided, but if it isn't a number of currencies would be dragged higher," said Henderson.

Views were divided on the likelihood of a test or break of 150, which some fear could prompt renewed Asian turmoil and a Chinese devaluation, and disrupt markets worldwide.

China, which has already slowed its reform programme in response to weaker growth, is expected to continue shouting loudly about the risks posed to its economy by a weaker yen.

But the immediate likelihood of a yuan devaluation was considered remote -- unless the yen descended into a tailspin.

"The threat of an imminent devaluation is non-existent. It's not going to happen," said Henderson."The threat next year is more serious, because export growth will continue to decline."

Kevin Chan, economist at Nomura in Hong Kong, said the global risks of a Chinese yuan devaluation were so great, central banks would defend the yen at 150 to the dollar.

"If the market tests the tolerance of central banks and it hits 150 again, we'll see more intervention," he said.

Analysts said the first line of contagion from a yen decline would be into the rest of Asia rather than directly towards China, but a repeat of the violent market moves and panic that Asia experienced last year was unlikely.

"It's going to be much more gradual, a steady grind lower," Henderson said.

China's currency would only come under pressure if the Hong Kong dollar peg snapped. This could occur only if the local population lost all confidence and switched banking deposits into other currencies.

Marshall Mays, chief strategist at Nikko Securities, said fears of a yen blowout were overstated. At current levels, the yen is alreadyapproaching its bottom, he said.

"The fact is the Japanese have not embraced radical change, they are only talking about it, so people are disappointed and there's already been some more weakening," he said.

Further deterioration of Japan's economic condition was possible, but the world's second largest economy had already hit the bottom of its own cycle, implying limited downside risk.

"The mood might get worse and bring the currency down another five to 10 per cent, but that's about it," he said.

If the yen did weaken sharply, Mays forecast a kneejerk reaction in Asian markets, with subsequent recovery as Asian markets decoupled from sudden yen movements.

Mays also said the US dollar was at or very near to its peak, suggesting that while some modest and short-term yen weakness was possible, longer-term yen strength was more likely as the dollar started to falter.

"Whether the (US dollar) peak happens this quarter, next quarter or in the first half of next year, the general cycle is that thedollar is at its peak," he said.