Unfortunately, volatile exchange rates are still a reality in many emerging and frontier markets. Therefore, AADFI and TCX are committed to supporting Public and National Development Banks (PDBs and NDBs) in finding local currency financing, as the devastating effect of currency volatility in times of crisis are all too clear.
Any unhedged currency exposure eats away lending capacity and profitability from these Development Banks, at the moment when it is needed most, and therefore makes them procyclical instead of countercyclical. AADFI and TCX are ready to work together to provide solutions to improve the way development finance is provided, by allowing the borrowers to take out their loans in their own local currency.
Please read their joint declaration here.