The Thai markets yesterday welcomed the appointment of Chuan Leekpai as the country's 23rd prime minister, although analysts were sceptical over how long the honeymoon would last. The baht and stock market got off to storming starts, only to stage nervous retreats in late trading. Most markets in the region fell amid worry over US interest rates and mounting economic problems in South Korea and Japan. Worst hit were Malaysia and the Philippines, which both fell more than 2 per cent. Thailand took centre stage, as the baht surged more than 4.5 per cent to 36.50 to the US dollar and the SET Index jumped 3 per cent before profit-taking and caution took over. The index ended 1.03 per cent lower at 487.94 points, while the baht back-tracked to 37.20 offshore and 37.10 onshore in late trade. 'This was short-term domestic euphoria,' Russell Kopp, the head of research at Dresdner Kleinwort Benson, said. 'I suspect as the week goes on people will realise these problems won't go away just because we've got a slightly better government.' Investors started the day showing optimism that Mr Chuan's new Democrat-led government would be better equipped to handle the economic crisis and meet the tough conditions set in the International Monetary Fund rescue package. As the day wore on, the market was haunted by the same old concerns. Desmond Supple, the head of regional currency research at Barclays BZW, said: 'I am sceptical how long this honeymoon period will last.' He said that while many had praised Mr Chuan's appointment, Thailand on paper now had a weaker government with an eight-party ruling coalition instead of six, and with a slimmer parliamentary majority. 'The same question remains over the government's ability to implements its [economic] reforms,' he said. Mr Chuan, who was sworn in at the weekend, aimed to form a Cabinet by Friday and pledged to do his best to appoint the right people to do the right jobs. Dealers said the baht could strengthen to 35 to the dollar if Mr Chuan's formation of a Cabinet went smoothly. A slip-up would lead to a new sell-off in the baht, analysts said.