Asian central bankers are on guard but say they are not overly concerned that the Russian ruble's collapse will trigger a big sell-off of their own currencies, saying their fundamentals are favorable and their currency defenses strong.
Currency and stock markets in Asia generally firmed on Wednesday after a two-day sell-off that saw Indonesia's rupiah drop to its weakest level since the Asian currency crisis in 1998 and Thailand's main stock index register its biggest intraday loss since October 2008.
"We're still safe," Bank Indonesia spokesman Peter Jacobs said on Wednesday. "Investors can see that what's causing depreciation is external factors, whereas internally we've improved."
Bank Indonesia said it had sold dollars to support the rupiah on Tuesday, and traders said the Reserve Bank of India and Bank Negara Malaysia had also intervened in recent weeks.
"Russia's economic crisis should not have a big impact on Thailand," said Mathee Supapongse, a senior official at Thailand's central bank, which left interest rates on hold on Wednesday.
Markets are speculating that Russia could even impose capital controls in coming days, with three retail currency trading platforms halting trade in rubles, which would further hit risk appetite.
"The Russian situation is unique," said Dan Martin at Capital Economics in Singapore. "But the fear is that it just shatters global confidence and raises general risk aversion."
"In Asia, Indonesia looks the most vulnerable. It's still got its big current-account deficit," Martin added.
Despite recent falls, the rupiah might still be a little overvalued, he said.
However, Indonesia's central bank deputy governor, Mirza Adityaswara, told reporters on Wednesday there was no need for panic about the rupiah's fall, describing the country's economy as "sound" and the currency as undervalued.
India also has a current-account deficit, and the rupee fell to a 13-month low against the dollar on Wednesday on fears of foreign selling. It recovered later on likely central bank intervention, according to traders.
"The current fall in the rupee is in line with all emerging market currencies and we are no different," said a source with direct knowledge of the Reserve Bank of India's exchange rate policy.
"We are less worried as overall market conditions are better, like fiscal condition is within control, current account deficit is low, inflation is falling," the official said.
Along with the ruble rout, investors are waiting to see what guidance the U.S. Federal Reserve gives later on Wednesday on the timing of an eventual rise in U.S. interest rates, which could draw yet more funds away from Asia and elsewhere.
Still, Asia's central banks are much better placed to deal with exchange-rate pressures than they were during the currency crisis in the late 1990s.
"The lessons have been learned," said Khoon Goh, a currency strategist at ANZ Bank. "A lot of central banks have built up foreign exchange reserves as an insurance policy."
This means they should be better able to weather capital flight without resorting to capital controls. They have also put in place currency swap arrangements, including the multilateral Chiang Mai Initiative, to bolster currency defenses.
"In Asia we coordinate in a way that we help each other," said Jacobs at Bank Indonesia. "In case the rupiah tumbled and our forex reserves dropped, we could borrow using our bilateral swaps or the Chiang Mai Initiative."
India remains outside the initiative, which covers the 10 members of the Association of South East Asian Nations (ASEAN) plus China, Japan and South Korea. But the source with knowledge of the Indian central bank's exchange rate policy hinted that it might like to become a part of it.
"There are so many discussions going on for regional swap lines. There is already a BRICs swap line," he said, referring to a swap agreement in place between the world's biggest emerging markets of Brazil, Russia, India and China.
"(And) there is an ASEAN swap line which India may join."