Singapore, Aug 24 (IANS): The recent equity sell-down and currency fall in India and Indonesia have raised contagion fears across Asia, similar to the Asian financial crisis in 1997.

What started off as a relatively contained sell-down in Indonesia and India is now turning into a confidence crisis. The Indian rupee has lost 12 percent since May 2013, making it the worst performer in the emerging market currency basket, Xinhua said in an analysis Saturday.

There is now widespread panic over the rupee, and the short-term measures imposed by the Indian government such as curbing the import of gold are widely seen as ineffective.

In Indonesia, the sharp weakening in the rupiah and weak commodity export prices have caused its foreign exchange reserves to fall by a significant 18 percent year-to-date from $112 billion to $92 billion, fuelling investors' concerns over the defensibility of the currency and the concurrent risks of sharp policy rate hikes.

The impact of capital outflows and financial turbulence as a result of India and Indonesia problems will undoubtedly be significant and widespread in other Asian emerging economies such as Thailand, Malaysia and the Philippines, where bubbles have been inflated by easy credit and super easy monetary policy.

During the 1997 Asian financial turmoil, the currency meltdown in Thailand sent a chain reaction of weaker currencies, falling stock markets and a steep rise in private debt across Southeast Asian economies and South Korea, sinking most of them into deep recession.

CIMB research said for the rest of the Asian economies, recent developments in India and Indonesia should have very little negative economic impact. Backed by better regulated financial sector and stable domestic growth drivers, Asian financial markets should also be able to maintain a steady inflow of capital.

Credit Suisse research believed that the impact of India and Indonesia sell-down upon North Asian economies such as China and South Korea will also be limited.