Matthew C Klein, Columnist

Australia Looks Like an Emerging Market

The performance of the Australian dollar against the U.S. currency suggests that the island nation is vulnerable to many of the same pressures affecting Brazil, South Africa, and other emerging markets.

January 30, 2014 at 11:23 PM UTC

By Matthew C Klein

Matthew C. Klein writes for Bloomberg View about the economy and financial markets. He previously wrote for the Economist magazine and its economics blog, Free Exchange. Before that, Klein was a research associate at the Council on Foreign Relations, where he spent more than two years studying the history of the Federal Reserve and the intellectual history of monetary economics for an upcoming book by Sebastian Mallaby. He also worked at Bridgewater Associates, where he studied the economies of Central and Eastern Europe and advised institutional investors on asset-liability management. Klein has a bachelor's degree in history from Yale University. Originally from Chicago, he lives in New York.

Provide news feedback or report an error

Site feedback:

Take our Survey

This article is for subscribers only.

Here's a question? Is Australia a developed nation? By all appearances it is, or at least it seemed that way until this past year.

By way of background, emerging markets had a great run after the developed countries resorted to monetary stimulus in response to the financial crisis. Money flowed anywhere that offered higher returns -- remember when it seemed like every country could borrow money for years at low interest rates? -- while economies such as Australia and Brazil flourished as China bought vast quantities of their raw materials.

Now the rich countries seem to be getting back on their feet. One consequence for poorer countries has been a reversal of capital flows. The easiest way to see this shift is in the declining value of their currencies: