The volume of Japanese currency circulating overseas soared in the past two years due to the steady appreciation of the yen's value, Bank of Japan officials disclosed Monday.

Citing a commercial banking survey as the basis for their report, they estimated the amount of yen circulating outside Japan totals $1.2 billion, roughly four times the amount of two years earlier.They said the yen were mostly spent by travelers to Hong Kong, Taiwan, the Philippines and Thailand - although some remained in Western Europe and the United States.

One official said the sharp expansion in yen abroad is a welcome development in that it reflects the rising status of the yen as an international currency. But he admitted some Japanese may have taken large amounts of yen overseas in order to evade taxation.

The central bank officials said they expect the yen to continue to appreciate against the dollar in the months ahead, leading to a further surge in yen overseas.

Nevertheless, analysts agree the amount of yen circulating outside the country remains relatively small. Even in the case of Japan itself, almost 55 percent of the nation's exports and 83 percent of all imports are settled in

dollars. Only about 34 percent of Japan's exports and 10 percent of its imports are denominated in yen.

Japanese analysts said much of the nation's trade is traditionally settled in dollars and there is nothing to suggest matters will take a different tack. Still, there is a growing feeling in Japanese trading circles that it is time to begin thinking about making some changes in the situation.

Mitsui Bank, for example, says Japan should strive to promote a yen trading zone that would include China, South Korea, Hong Kong, Singapore, Malaysia, Thailand, Indonesia, the Philippines and Burma. Although these countries mainly use the dollar in settlement of trade bills, fully 20.6 percent of their combined business is conducted with Japan. Since most of their currencies are closely linked with the dollar, the bank charged, their yen-denominated debts are a heavy burden.

The report claimed that by switching to yen-denominated quotations and settlements these countries would be adapting more realistic attitudes that would favor everyone, including the Japanese.