Although Asia's emerging economies have largely escaped the harmful effects of the Mexican currency crisis, economist Joseph P. Quinlan of Dean Witter Reynolds Inc. notes that several will be hurt by the soaring yen. "The yen's strength," he says, "is bad news for those nations that trade in dollars but borrow in yen."

Those at risk include China, Thailand, the Philippines, Indonesia, and Malaysia (chart). Particularly vulnerable is Indonesia, with 40% of its huge $88 billion foreign debt denominated in yen, and 90% of its export revenues denominated in dollars. None of these seems likely to suffer a Mexican-style debt crisis. However, several countries have already asked Japan for softer lending terms, and it may be forced to provide some debt relief if the yen continues to rise.

Meanwhile, at least one nation--South Korea--is benefiting from the soaring yen. With the Korean won down 25% against the yen since 1993, Korean cars, semiconductors, steel, and chemicals are winning market share from Japan in many Third World nations. As a result, exports are projected to rise $2.5 billion this year--eclipsing a $1.3 billion increase in imports fueled by higher prices for parts and components imported from Japan.

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