Asian governments have begun turning the focus of their exchange rate policies away from the sustained rise in their currencies versus the US dollar, to a prospective clash with China over its pegged currency regime, say some analysts. 'Central banks in Asia have certainly been more willing recently to see their currencies appreciate against the dollar, mainly because most regional currencies - with the exception of the Malaysian [dollar] and the yuan - have been appreciating together,' said Deutsche Bank chief economist Michael Spencer. 'But the question that has always been hanging around is the tolerance for appreciation versus the yuan. If that is the country your exporters are competing against, and your currency appreciates by a per cent or so, what does that cost you in terms of growth?' As the relative strength of their currencies to the yuan erodes the competitiveness of their exporters, patience among Asian countries is wearing thin, he said. 'We are not far from a limit to tolerance.' Markets would remain in turmoil, he added, so long as President Bush failed to address the US's growing deficits. But Mr Spencer dismissed suggestions from some watchdogs of the international financial system that turmoil on exchange rate markets may precipitate another 'Plaza Accord' type of intervention - this time aimed at orchestrating a rise in the US dollar. Named for the hotel where they met in New York in September 1985, the Plaza Accord was an agreement signed by finance ministers from the world's five biggest economies - the United States, Japan, West Germany, France and the UK - aimed at engineering a decline in the dollar. All countries agreed to intervene in currency markets as necessary and committed to a package of economic measures aimed devaluing the dollar. The Accord worked, and by the end of 1987 the dollar was down 54 per cent against both the Deutschmark and the yen. If market discipline failed to correct international imbalances, said an international economist yesterday, political pressure for another Plaza type agreement could mount. Post US election upheaval continued yesterday, with the US dollar retreating to a new record low of a shade under 130 against the Euro. The latest adjustments have left the Australian dollar 6.93 per cent up on the US dollar over the past three months. The New Zealand dollar has strengthened by a 6.54 per cent, the South Korean won 4.65 per cent and the Japanese yen 4.64 per cent. In Hong Kong, where the currency is supported below 7.80 to the US dollar, but free to strengthen from this level, the spot rate firmed to 7.7736, with 12-month forward rates indicating further gains to 7.634. Driven by speculative inflows into the Hong Kong dollar - despite low interest rates available on the domestic market - liquidity in the local system has ballooned, driving benchmark three-month Hong Kong Interbank Offered Rate to a fresh low of 0.148 per cent yesterday. 'We're seeing the same again, except more of it,' said UBS director, Asia interest rate research, Bert Gochet. Echoing comments about Asian central banks, Mr Gochet said Asian currencies had reached levels not seen in a long time because central banks had withdrawn from the markets and were now willing to see their currencies appreciate against the US dollar. 'There could be a realisation that domestic economies are strong enough to withstand some appreciation pressure, and a desire to keep down the price of oil imports may also be playing a role,' he said. But a Plaza Accord type intervention was likely only in the event that the dollar declines became a disorderly rout, he said. 'I would argue that at 130 against the Euro it is not yet disorderly. There are some fundamental reasons why the US dollar is weakening which is well understood by markets and policy makers, so I don't think we are close to being disorderly at this time. The danger of getting there depends on the speed of movements.' But Mr Gochet said the latest twist to the US dollar's downward spiral might have brought Asian Central banks off the sidelines: 'We are close to Central banks in the very near future intervening on a somewhat co-ordinated basis to prevent further appreciation.' Deutsche Bank's Mr Spencer said the US Federal Reserve was likely to raise its target interest rates by a further 25 basis points to 2 per cent on Wednesday, and Deutsche now expected a further 25 basis point rise in December - revising its earlier view that the Fed would skip another increase this year. 'That means the Hong Kong Monetary Authority (HKMA), will raise its discount rate as well but in the current environment I would be very surprised if banks responded by pushing up their prime rates. We have a flood of liquidity in the market and in fact there is pressure at the moment for banks to cut rates.'