Even as governments from Indonesia to India struggle to prevent epidemics among millions across southern Asia hit by a disaster that has killed more than 125,000 people, the won hit a seven-year high and the Taiwan unit set a four-year peak.

Analysts say Asian economies from China to India look stronger than those in Europe, Japan or the United States.

"The external environment in Asia has been remarkably good," said Ashley Davies, currency strategist at UBS in Singapore, adding that an expected cyclical slowdown in the region's economy seems to be shallower and less durable than previously expected.

Moreover, the US current account deficit has become more bloated than a year ago, and the inflows that have plugged that gap have declined, making US officials admit in public that the dollar needs to weaken to help narrow the shortfall.

In October net capital inflows to the US hit a one-year low $48 billion versus a record $55.5 billion trade gap.

An added boost to Asian currencies, analysts say, could come from speculation China may allow its currency to strengthen next year from a virtual peg of 8.28 per dollar.

Lehman Brothers expects China to allow a 5 per cent yuan rise next year, helping boost some Asian units as much as 20 percent.

"Our outlook is that 2005 will be the biggest inflection point for the region since the Asian crisis," Lehman said in a report this month. "It will be like the Asian crisis in reverse."

Yuan speculation has helped push up the South Korean won, Taiwan dollar, Singapore dollar and non-deliverable forward premiums on the currencies of China, Hong Kong and Malaysia through 2004.

"The yuan revaluation could happen anytime in the first half," said Davies. "If that happens, it would encourage further equity flows into Asia. That would also encourage the other currencies that are seen a proxy for the yuan."

The won, which may benefit from a stronger yuan, is Asia's best performing currency this year, having gained 15 percent. The Taiwan dollar, another likely beneficiary, has gained 7 percent.

Despite those gains, strategists say Asian currencies remain undervalued compared with their trade partners in Europe and the US. That would make Asian governments more agreeable to letting their currencies gain once China revalues the yuan.

Even as Southeast Asia reels from the devastation caused by the tsunami, Sani Hamid at 4CAST in Singapore says Thailand's currency could stand out among the largely underperforming Southeast Asian currencies, and gain 5 percent in 2005.