The GISD Alliance Working Paper: Managing Currency Risks to Scale Up SDG Investments in Developing Countries
Currency risks hinder investments in sustainable development, with existing solutions often unavailable or too costly in developing countries. This paper explores practical strategies for managing currency exposure, some already in use but lacking scale.
Key solutions include expanding onshore options, reducing hedging costs, and leveraging blended finance. From these broad categories, promising approaches with high impact and scalability are identified.
To scale these solutions, key recommendations include increasing local currency financing by international financial institutions, adopting a self-sustaining portfolio-level currency risk management facility by pooling exposures across currencies, and fostering policy reforms to strengthen local capital markets in developing countries.
Authored by: Dr. Gautam Jain, Senior Research Scholar at the Center on Global Energy Policy (CGEP) of Columbia University's School of International and Public Affairs