TCX generates development impact by protecting the most vulnerable from financial volatility emanating from currency risk. The Fund promotes and offers currency hedging solutions that convert hard currency development financing into investments in local currency in frontier and illiquid emerging markets. TCX does not compete with commercial banks: we are a hedge provider in those currencies and tenors where no commercial alternatives are offered yet. By carrying the currency risk for borrowers and shifting it to private markets, TCX enhances the sustainability, transparency and efficiency of development finance.


Our development impact framework encompasses three pillars.


Pillar 1: De-risking development finance through local currency solutions

TCX absorbs the currency risk of loans provided by development finance investors globally. This increases the risk-resilience of the impact generated by these investments and their corresponding contribution to the SDGs.


Pillar 2: Developing markets through risk reallocation

TCX redirects part of the currency risk it takes on its balance sheet to participants in international financial markets, contributing to market efficiency and transparency. These partnerships with development finance and commercial investors build lasting markets for local currency risk solutions.


Pillar 3: Increasing awareness through advocacy and thought leadership

TCX plays a crucial role in advocating for local currency finance by increasing awareness and understanding of currency risks. The local currency ecosystem expands through partnerships with international institutions and local parties in developing countries.


In the 2021 Impact Report, we present the set of indicators for each three pillars that helps quantify the anticipated impact from TCX’s hedging activities in 2021.


Please find a digital copy of the 2021 Impact Report here.