ROBERT SIEGEL, HOST:
After losing a lot of ground, stock prices were back up a bit today. Investor anxiety about the state of the world's currency markets seemed to ease. The current turmoil is reminiscent of the 1997 currency crisis in Asia, which hurt economies all over the world.
As NPR's Jim Zarroli reports, there are also some big differences.
JIM ZARROLI, BYLINE: This crisis got underway when Argentina decided to devalue its peso earlier this month. But soon, doubts were being raised about just how safe it was to invest in emerging markets in general.
DR. JERRY WEBMAN: Buying the bonds of a sovereign country is like, you know, making a loan to your neighbor. You're constantly evaluating whether you think he or she is going to be able to pay you back.
ZARROLI: Jerry Webman, chief economist at OppenheimerFunds says that as doubts have spread, people have been pulling their money out of countries like Turkey and Ukraine, driving down the value of their currency.
WEBMAN: We've recognized that there are some of these emerging economies that face some serious problems, more serious than we thought they were.
ZARROLI: On the surface, this downturn brings to mind the infamous Asian currency crisis of 1997. For years before that crisis, investors had been pouring money into Asian countries. Then, for reasons that are still being debated, the flow of money stopped, and countries all over the region, starting with Thailand, saw their currencies plummet. The International Monetary Fund tried to come to the rescue, but the damage had been done and growth slowed sharply throughout emerging markets. Could the same thing happen again? Economist Nariman Behravesh of IHS doesn't think so.
NARIMAN BEHRAVESH: While there are some similarities, I think we're not going to go through quite the crisis that we did in that '97, '98 period.
ZARROLI: Behravesh says, for one thing, there aren't the huge levels of debt in the emerging markets that there were in 1997. And countries tend to have more currency reserves on hand. And there's another difference, he says.
BEHRAVESH: In those days, before the Asia crisis, exchange rates were largely fixed, and that created big problems for these countries.
ZARROLI: Behravesh says that in the 1990s, countries like Thailand and Russia pegged their currencies to the dollar. That meant that when the crisis happened, they had to spend a lot of money propping them up. Behravesh says most countries now let their currencies float on the open market. That can cause problems, too, among other things that makes imports like oil a lot more expensive. But countries no longer have to exhaust their reserves in a vain attempt to save their currencies.
Hung Tran of the Institute of International Finance says there are countries with real problems out there. Some emerging markets have saddled themselves with too much debt and bad loans.
HUNG TRAN: Those issues need to be dealt with very clearly, very firmly, so that investors have a feeling that the country is really under good management and on the road of recovery.
ZARROLI: That may be why the countries that have suffered the most in the current downturn are politically turbulent places, like Turkey and Ukraine, and countries with a history of mismanagement like Argentina. But many other emerging markets have made important changes since 1997, and that could make this crisis end a lot differently than the other one. Jim Zarroli, NPR News, New York.