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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 the Carmignac Gestion asset manager.
While the Indian rupee has so far taken the worst beating, falling nearly 15% against the US dollar over the past three months, Indonesia's rupiah and the Brazilian real are down 10%, and the Turkish lira over 5% 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 bath 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 are now much better equipped.
In 1991, India had only 15 days worth of foreign exchange reserves, he said.
"Now we have reserves of six to seven months. So there is no comparison. And no question of going back to the 1991 crisis," he said.
This week, Nobel prize winning economist Paul Krugman wrote on his New York Times blog that in retrospect, the flood of money into emerging markets looks like a bubble.
But Krugman said "for the moment, I don't see a good reason to believe that the bursting of this particular bubble will be catastrophic".
Standard & Poor's rating agency agreed.
In a report it called the capital outflows "disruptive not destructive", and said most Asian developing nations will "weather the disruption without a sharp slowdown in economic growth or prolonged financial volatility".
