BIO has invested USD 10 million in The Currency Exchange Fund (TCX), a financial vehicle that supports a range of local currency products for developing countries. This unique cooperation initiative was launched by FMO in cooperation with international financial players. The fund focuses on currencies and maturities which are not covered by regular market providers. TCX has set out to significantly reduce the likelihood of default by companies, and in particular by SMEs, and to make a strong contribution to the development of local capital markets.

The investors in TCX, 22 at 31.10.10, have committed nearly USD 700 million of capital, with a paid-in capital standing at USD 471 million. TCX offers hedges in all DAC-country currencies where a market-based pricing may be obtained. Where possible both floating and fixed interest rate products are supported. The Fund offers non-deliverable and deliverable products. TCX regularly provides quotes in 53 currencies which amount to about 84% of DAC countries’ GDP and population.

TCX’s shareholders are paying particular attention to Sub-Saharan Africa, which is also a priority region for BIO, and to the microfinance, housing and infrastructure sectors.

BIO’s participation in TCX provides it with a hedging instrument to avoid the foreign exchange risks which weigh on these investments. Foreign exchange risk is an important decision-making criterion and this initiative will give BIO the means to provide greater support to local entrepreneurs, in particular as part of its strategy for Sub-Saharan Africa.