A proposal by crisis-hit southeast Asian nations to use local currencies to settle trade amongst themselves would be unlikely to have an immediate impact if adopted, but could help regional integration longer term, analysts said.

They said they were still unsure how the currency plan would work, but the hectic activity generated by leaders of the region travelling to each other's countries was becoming a show to shore up confidence in their economies.

"I am seeing them as making an effort. The market would rather see that the governments are doing something to ease the burden on their economies," said Mr Liew Yin Sze, chief economist at J.M. Sasson & Co in Singapore.

"As someone said, this will probably accelerate the pace of economic integration (in the region) due to necessity rather than choice," he said. "But, a European Union kind of amalgamation is quite a long way. We are not even close to common economic zone."

At the weekend Malaysia's Prime Minister Mahathir Mohamad concluded a tour of three Association of South East Asian Nations (ASEAN) members, Thailand, the Philippines and Singapore, to promote the local currency trade concept.

"In principle, they have no objections but they will study the advantages and disadvantages of the Singapore currency being used as a peg for trade and use of each own's currencies for the purpose of trade between ASEAN countries," he said.

Indonesia, Malaysia, Thailand, the Philippines and, to some extent, Singapore, have seen their currencies depreciate sharply against the US dollar in the last six months.

Malaysia's Deputy Prime Minister Mr Anwar Ibrahim said the new system would be bilateral payments arrangement between central banks, which would provide guarantees to private and public sector traders for a specified list of products.