PR86469

AMSTERDAM, Nov. 13, 2020, /PRNewswire=KYODO JBN/--

Investors support TCX to protect the poorest against FX risks amidst COVID-19

The Currency Exchange Fund (TCX) is thrilled to announce that the European

Commission (EC) [https://ec.europa.eu/info/index_en ], supported by KfW

[https://www.kfw-entwicklungsbank.de/International-financing/KfW-Entwicklungsbank/ ],

the International Finance Corporation (IFC [https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/home ] on behalf of the International Development Association (IDA) [https://ida.worldbank.org/ ]

and Proparco [https://www.proparco.fr/en ] invested over USD 200 million in the Fund.

The investments, combined with the 2019 capital increase, raise TCX's

[https://www.tcxfund.com/tcx-investors/ ] risk bearing capacity by 65% to a

total capital base of USD 1.25 billion. This allows the fund to support USD 30

billion in local currency investments in frontier countries during the tenor of

the EC investment. This aggressive growth reflects the increased demand for

local currency from households, enterprises and institutions in frontier

markets. It also shows the dedication of development finance institutions to

protect their borrowers from foreign exchange risk that comes with cross-border

lending. During the COVID crises many frontier market currencies were hit, with

devastating results for hard currency borrowers. The investments come with a

focus on borrowers in IDA countries, especially Sub-Sharan Africa, and in the

European Neighborhood countries.

TCX [https://www.tcxfund.com/products/ ] has provided currency risk protection

throughout the crisis without disruption and the additional capital further

strengthens the Fund's ability to provide protection in times of severe financial instability.

Ruurd Brouwer, CEO of TCX [https://www.tcxfund.com/about-the-fund/ ] states:

"The investment is a timely response from our investors to counteract the

detrimental effects of the pandemic. Especially the poorest countries that lack

reserves and adequate health care systems are vulnerable to this external

shock. Currency depreciations put households, enterprises and local

institutions that have borrowed in foreign currency at risk of default.

Allowing them to borrow in their local currency instead increases financial

resilience and creates the stability needed to reduce the negative impact of

this and future crises."

Background information

TCX [https://www.tcxfund.com/about-the-fund/ ] is a global development finance

initiative which offers long-term currency protection in 100+ financial markets

where such products are not available or poorly accessible. The Fund started

operations in 2007 and has since then provided hedging instruments with a total

volume of USD 8.5 billion, spread over 3500+ transactions. Today the fund has

an exposure of over USD 5 billion in 60 frontier and emerging market

currencies. By selling parts of this exposure to private investors it creates

markets and gives these countries access to the international capital markets.

SOURCE: The Currency Exchange Fund