Currency exchange funds are designed to mitigate currency and interest rate risks in order to attract and lock in long-term private equity and private debt in local currency. These instruments replicate the movements of the currency in the exchange market by either holding currency cash deposits in the currency being tracked or using futures contracts on the underlying currency.

Instrument category

Risk mitigation instruments

Implementation status

Moderate - tried and tested

Enabling conditions and success factors
  • Reliant on competent local financial institutions.
Instrument benefits
  • Contribute to financial sector deepening and financial stability.
  • Induce incremental investment through mitigation of risks for investors in key sectors.
  • Can boost trade.
Challenges and risks to implementation
  • Can be expensive to access.

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