Long-term FX risk management (TCX)

This case study describes TCX, a currency hedging solution designed to reduce currency and interest risk for energy and climate investments in developing countries by enabling long-term finance in local currencies.

• TCX addresses financing barriers for energy investment in developing countries by providing long-term fixed- and inflation-linked cross-currency swaps and interest rate swaps, allowing investors to lock-in finance in local currencies.
• Since its 2013 launch, TCX has de-risked nearly USD 8.4 billion of external lending across 70 currencies in emerging and frontier countries, and sold USD 1.5 billion of currency risk to international investors.
• In 2020, Sub-Saharan Africa was the second most active region for TCX, representing 19% of de-risked finance (USD 187 million) across 18 countries.
• TCX's financing support in 2020 was heavily weighted toward microfinance and SME finance at approximately 70%, while infrastructure and renewable energy projects accounted for about 6%.
• The solution requires specific preconditions to function in nascent markets, including an effective regulator, policy coherence, and a basic institutional and legal framework. Additionally, TCX requires counterparties with strong credit ratings, such as DFIs, to take on credit risk.

APA

Climate Policy Initiative (2021). Long-term FX risk management (TCX). https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/long-term-fx-risk-management-tcx-2/

Chicago

Climate Policy Initiative. Long-term FX risk management (TCX). 2021. https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/long-term-fx-risk-management-tcx-2/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Long-term FX risk management (TCX) |date=16 September 2021 |url=https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/long-term-fx-risk-management-tcx-2/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2021longterm, author = {{Climate Policy Initiative}}, title = {{Long-term FX risk management (TCX)}}, institution = {Climate Policy Initiative}, year = {2021}, month = sep, url = {https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/long-term-fx-risk-management-tcx-2/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }