U.S. interest rates may be rising, but that won't trigger another Asian Financial Crisis: Analysts

The satellite system whitethorn beryllium facing conditions seen during the 1997 Asian Financial Crisis — assertive U.S. involvement complaint hikes and a strengthening U.S. dollar.

But past is improbable to beryllium repeated, analysts said, though they caution that immoderate economies successful the portion are peculiarly susceptible to currency devaluations reminiscent of the time.

On Wednesday, the U.S. Fed Reserve made different involvement complaint hike of 75 ground points.

The past clip the U.S. pushed up involvement rates this aggressively successful the 1990s, superior fled from emerging Asia into the United States. The Thai baht and different Asian currencies collapsed, triggering the Asian Financial Crisis and starring to slumps successful banal markets.

This time, however, the foundations of emerging Asian markets — which person evolved into much mature economies 25 years connected — are healthier and amended capable to withstand pressures connected overseas speech rates, analysts said.

For instance, due to the fact that determination are less overseas holdings of section assets successful Asia, immoderate superior flights would inflict little fiscal symptom this clip around, UBS Global Wealth Management enforcement manager for Asia-Pacific FX and macro strategist, Tan Teck Leng, told CNBC's "Squawk Box Asia" connected Thursday.

"I deliberation this brings backmost memories of the Asian Financial Crisis but for one, the speech complaint authorities has been a batch much flexible successful today's context, compared to backmost then," helium said.

"And conscionable successful presumption of the overseas holdings of the section assets, I deliberation that determination is besides the consciousness that the holdings are not elevated."

"So, I don't deliberation we're connected the cusp of an outright currency collapse."

"But I deliberation a batch depends connected erstwhile the Fed had reached an inflection point."

Tan said, however, that among the riskier currencies, the Filipino peso was 1 of the astir vulnerable, fixed the Philippines' anemic existent account.

"And I deliberation the conflict lines successful Asian currencies is truly drawn on the lines of — against the backdrop of higher U.S. rates — the outer financing gaps to the likes of Philippines and India, Thailand. These would really beryllium the currencies that are astir prone to near-term weakness wrong Asia."

On Thursday, however, the cardinal slope of the Philippines besides raised its main argumentation complaint by a further 50 ground points and signaled it would instrumentality further hikes down the track. Reducing currency disparity with the U.S. dollar reduces the risks of superior flights and overseas speech complaint collapses.

In contrast, economies with much accommodative monetary policies — that is, those that aren't hiking involvement rates successful tandem with the U.S. — such arsenic Japan, whitethorn besides hazard further weakening of their currencies, said Louis Kuijs, main economist for Asia-Pacific astatine S&P Global Ratings.

He warned that downward pressures connected Asian currencies whitethorn rise, particularly successful airy of expectations that the Fed volition proceed to hike rates good into the archetypal fractional of 2023. Nevertheless, he, too, does not expect different Asian Financial Crisis.

"They mostly fto speech rates sorb the outer pressure, alternatively than supporting the currency by selling FX reserves."

"Also, Asian [emerging market] governments person pursued much cautious macroeconomic policies successful caller years than earlier the 1997 crisis."

Manishi Raychaudhuri, an Asian equity strategist astatine BNP Paribas, said the "present occurrence is not comparable with the carnage that they faced during the Asian crisis" chiefly owed to healthier equilibrium sheets and larger overseas speech reserves.

Depleted overseas reserves triggered the floating and consequent clang of the Thai baht successful the 1997 crisis.

Some Asian economies are besides moving equilibrium of outgo surpluses and healthier overseas reserves improved by efforts specified arsenic the Chiang Mai Initiative Multilateralization successful 2010, a multilateral currency swap statement betwixt ASEAN+3 members, said Bert Hofman, manager of the East Asian Institute astatine the National University of Singapore.

Nevertheless, Vishnu Varathan, Mizuho Bank's caput of economics and strategy, said the overseas speech turbulence for emerging Asia volition stay important and volition apt origin akin distresses similar those of the 2013 taper tantrum — erstwhile the marketplace reacted powerfully to the Fed's effort to dilatory quantitative easing done enslaved and banal sell-offs.

"Panic astir an impending fiscal crisis, and attendant illness successful Asian emerging markets overseas speech is arguably overblown … but that said, the menace of persistent FX turbulence is not obviated either," helium said.

"So, further downside overseas speech risks cannot beryllium carelessly dismissed connected "this time, it is different" refrain."

Despite the jitters, determination are positives for markets.

The Chinese yuan, for instance, is showing resilience, said Dwyfor Evans, State Street Global Markets caput of Asia-Pacific macro strategy.

"A batch has been spoken astir the weakness of the Chinese yuan but successful existent fact, erstwhile you look astatine the Chinese yuan comparative to different determination currencies, actually, China has held up comparatively well," Evans told CNBC's "Capital Connection" connected Thursday.

"So, it's a precise unchangeable currency comparative to the basket."

He added that the slowdown successful China could, however, heighten superior flows successful and retired of the country, and that could person a much important interaction connected the Chinese yuan down the track.