Long-term FX risk management (TCX)

TCX addresses currency and interest risk in emerging and frontier markets by providing long-term fixed- and inflation-linked cross-currency and interest rate swaps. Since 2013, it has de-risked nearly USD 8.4 billion of external lending across 70 currencies. In 2020, Sub-Saharan Africa was the second most active region, representing 19% of de-risked finance (USD 187 million) across 18 countries. The model relies on high-credit-rated counterparties, such as development finance institutions, to manage credit risk and connect solutions to end-clients. While 70% of 2020 supported financing targeted microfinance and SMEs, infrastructure and renewable energy projects accounted for approximately 6%.

• TCX mitigates two primary financing obstacles for energy investments in developing nations: currency risk and interest risk, allowing investors to secure long-term finance in local currencies.
• Between 2013 and the reporting period, TCX de-risked nearly USD 8.4 billion of external lending in frontier and emerging countries across 70 different currencies 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, with USD 187 million in de-risked finance, representing 19% of the total, spanning 18 countries.
• The TCX model requires counterparties with strong credit ratings, such as DFIs, because TCX itself cannot assume credit risk.
• In 2020, the majority of TCX-supported financing (approximately 70%) was directed toward SME and microfinance sectors, while renewable energy and infrastructure projects comprised about 6%.

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} }