Macroscope | Free fall in oil prices may cut both ways for emerging markets
Bear market for crude has hit producers like Nigeria hard but given other developing countries a chance to put finances in order
Is the 32 per cent drop in the price of crude oil since June a blessing or a curse for emerging market economies? For Nigeria - Africa's largest oil producer, which relies on the commodity to provide more than 70 per cent of its revenues - the damage has been plain for all to see.
Since early August, the naira, Nigeria's currency, has fallen 10 per cent against the US dollar, forcing the central bank to burn through its dwindling foreign exchange reserves in a futile attempt to defend the naira's peg against the greenback.
On Tuesday, Nigeria's central bank was forced to raise its main interest rate to a punitive 13 per cent - its first rate rise in three years - and undertake an 8.5 per cent devaluation of the naira in an effort to fend off an oil-driven speculative attack against the currency.
Other oil-producing nations - notably Venezuela, which depends on oil for half of its revenues (and 95 per cent of its exports) and is now perceived to be at greater risk of defaulting on its foreign debts - are in dire straits.
Yet for Indonesia, a large oil importer with a US$23 billion fuel-subsidy bill that places huge strain on its public finances, the fall in prices could not have come at a better time.
Last week, Indonesia's new president, Joko Widodo, fulfilled a key election pledge by raising the price of subsidised petrol and diesel in order to free up funds for much-needed infrastructure development.