Access the report here.
TCX protects public and private sector borrowers in frontier and emerging markets from financial volatility emanating from currency risk. We also support capital market development, mobilize private investor interest, and advocate for structural adoption of local currency financing solutions.
TCX offers currency risk solutions that convert hard currency development lending into lending linked to the rate of the local currency. This way, borrowers still receive hard currency but are not impacted by movements in the exchange rate. Their debt service repayments become stable and predictable.
As a development finance initiative, TCX pursues maximum development impact and does not compete with commercial banks. We are active in currencies, tenors and sizes where commercial alternatives are absent or inadequate. The feature story on p. 30 of this year’s report delves into TCX’s role in different markets.
Our development impact framework encompasses three pillars:
Pillar 1: De-risking development finance
TCX hedges lending to private and public sector borrowers in developing countries that create environmental, economic and social impact and contribute to the UN Sustainable Development Goals (SDGs). We improve the financial resilience of the borrowers and projects, especially in volatile times.
Pillar 2: Supporting capital market development and mobilizing the private sector
TCX shifts frontier market currency risk from borrowers to private investors, which enhances the transparency and efficiency of development finance. Most importantly, it ensures that currency risk is borne by institutions that seek and can manage it and not by vulnerable borrowers
Pillar 3: Advocating for local currency finance and currency risk protection
TCX advocates for rethinking the traditional practice of hard currency lending and educating borrowers about the importance of managing currency risk. This requires a strong mandate from donors, policy setters, and senior leadership of international financial institutions. Our advocacy and thought leadership activities contribute to increased awareness and understanding on a global level
TCX measures its expected impact through a set of indicators. Featured case studies, interviews, and stories of borrowers further amplify TCX’s reach and development impact.
Please find a digital copy of the 2023 Impact Report here.