The ongoing slide in global currencies may have more advantages for the affected countries than many observers suspect. Nevertheless, a number of important countries are at risk of instability as the global financial system undergoes a correction. The U.S. economy is slowly recovering, a change that prompted Ben Bernanke, the chairman of the U.S. Federal Reserve, to first hint in May that the Fed might pull back on the asset buyback program that has injected tens of billions of dollars every month into the U.S. financial system.

The Fed's hint that it is confident enough in U.S. growth to pull back on its quantitative easing program has triggered investors to reconsider their positions. Capital has flooded back into dollar markets, bringing down the relative value of most major developing countries. The ongoing slide in currencies and stock markets around the world has prompted enormous concern among national leaders. Just Thursday, Brazil's Central Bank President, Alexandre Tombini, canceled a planned trip to the United States to stay at home and address the challenges of the country's currency devaluation.

For countries like Brazil, where inflation haunts the national consciousness, devaluation threatens to upset the government's fragile efforts to ensure that inflation targets are not threatened by the rising price of imports that devaluation will inevitably cause. Rising prices threaten consumer (and therefore voter) satisfaction and undermine the possibility of consumption driving aggregate growth. Recent investment in Brazil has been dominated by direct investment in manufacturing and commodities extraction. This kind of investment is less likely to be deterred by current market pressures, which prompt investors to pull out of currencies, stocks and bonds.

The countries most affected when investors flee emerging markets are those that rely on the fickle inflow of investment to balance out long-standing deficits in trades and services. These include Turkey, which has seen its financial and capital accounts plummet, triggering a negative balance of payments in May and June alongside a steep dive in the value of the Turkish lira. India is also vulnerable, with a deep trade deficit due to a persistent reliance on energy imports. Other countries are on the edge. Indonesia, for instance, only developed a deficit in the trade of goods and services at the end of 2011, and Jakarta has wavered between balance of payments deficits and surpluses since that time.

Tools exist for countries to combat market pressures that might otherwise cause massive disruptions in local economies. Turkey intervened in currency markets by auctioning $350 million in foreign exchange Thursday. Indonesia raised interest rates in June — which they hope will have the effect of attracting foreign currency deposits — and has increased reserve requirements for banks in an effort to slow inflation. High foreign currency reserves remain the critical factor in helping countries balance and maintain their financial stability in times of global turmoil.

The fear is that the current slide in currencies is a replication of the crisis that shook markets 16 years ago. This concern is particularly acute in Southeast Asia, where memories of the 1997 collapse of the Asian Tigers are painfully fresh. It is not clear yet how far this process will take the region, but it is clear that this is a global phenomenon affecting a range of countries — and domestic vulnerabilities will be the deciding factor. The difference this time around is that oil prices have made what appears to be a secular shift to a much higher range. Oil prices in 1997 were a fraction of their current level, and this has contributed to aggravating trade deficits. These deficits were perhaps affordable in times of growth, but with global economic uncertainty prevailing, they have become a serious liability.

Yet despite the anxiety in the press and the statements of alarm from public officials, it's not all bad news for developing economies. Corrections and rebalancing are a natural part of the economic process, and currently, capital that was pushed overseas by the Fed's actions and by low economic growth is returning. This cannot help but have a depressing effect on the countries that had absorbed that excess capital. Slower growth will push down wages, and weaker currencies will improve the competitiveness of exports. These factors can aid some countries as they compete to attract export-oriented investment. As long as such countries keep domestic unrest in check — particularly in Latin America and Southeast Asia — they can improve their access to job-creating foreign direct investment.