Key facts
- Implementing Partner:
KfW
- Guarantee volume:
up to €165 million
- Global Gateway areas of partnership:
Multisectoral - Climate and Energy, Digital, Health
- Sectors:
local currency financing
- Geographical focus:
Africa
- Type of support provided:
Financing, Technical assistance
- Types of investments:
hedging of local currency risks in lending activities
- Investment period:
open for investments until December 2024
- Technical assistance:
up to €1 million
Description
In development finance, loans are typically denominated in US Dollar, Euro or Japanese Yen. Local borrowers however earn the income to repay a loan in local currency and are thus exposed to significant currency risks.
In mature capital markets, such currency risks can be managed via a variety of hedging solutions. In many of the EU’s partner countries, characterised by less mature capital markets, local borrowers do not have the opportunity to obtain currency hedges at affordable cost. Given this market gap, the EU Market Creation Facility supports The Currency Exchange Fund (TCX) in its effort to shield international lenders and their local borrowers in emerging and frontier markets from exchange rate volatility.
How can businesses and investors get involved?
If you are a business representative or an investor with a need to mitigate currency risks in frontier markets, we recommend getting in touch directly with TCX.
Contact: info@tcxfund.com
About KfW
On behalf of the German Federal Government, KfW works closely with the institutions of the EU and its Member States. To this end, KfW supports the Team Europe approach and works in close cooperation with the European Commission, as well as with other multilateral or bilateral actors in European development finance.