Oil Price Collapse Triggers Currency Crisis In Emerging Markets

Monday, August 24, 2015
By Paul Martin

By Nick Cunningham
OilPrice.com
Sun, 23 August 2015

Emerging market currencies are getting slammed by the collapse in commodity prices, a downturn that has accelerated in recent weeks.

The health of many middle-income and emerging market economies has been predicated on relatively strong commodity prices. A whole category of countries achieved strong growth by exporting their natural resources. For example, Brazil’s impressive economic expansion since the early 2000s, and the huge number of people that were able to jump into the middle class, was made possible by exporting oil, soy, iron ore, beef, and a variety of other resources. High prices for these goods led to more growth, a strengthening of the currency, and a real estate boom in cities like Rio de Janeiro.

The same story unfolded in many other commodity-driven economies, from Latin America, to Africa, to Central and Southeast Asia.

However, with commodity prices down dramatically from a year ago, growth in these countries has slowed, and their currencies are sharply weaker than they have been in the past.

The Rest…HERE

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