Experts play down new Asian financial crisis fear

Plunging emerging market currencies on the prospect of US stimulus tapering have stirred memories of the 1997 Asian financial crisis, but analysts doubt a similar catastrophe is in the making.

"There are negative linkages [now] but I don't think that we are in a repetition of the 1990s crisis," said Jean Medecin, a member of the investment committee at Carmignac Gestion.

While the Indian rupee has so far taken the worst beating, falling nearly 15 per cent against the US dollar over the past three months, Indonesia's rupiah and the Brazilian real are down 10 per cent, and the Turkish lira over 5 per cent in a trend that is frightfully reminiscent of the crisis that began in Thailand in mid-1997.

Back then, investors reacted by panicking, withdrawing funds en masse, resulting in the Thai baht eventually collapsing. The phenomenon then spread like a wildfire throughout Asia, and even to Russia, with foreign capital vanishing almost with the blink of an eye.

Short of capital, emerging countries suffered acute shortages of credit, plunging them even deeper into the crisis.

Fifteen years on, India's Prime Minister Manmohan Singh last week said emerging countries were now much better equipped.