MFX Solutions, a leading provider of solutions for foreign exchange risk exposure and hedging to microfinance practitioners has announced that in its first year and half of operation, MFX provided hedging in 25 currencies to 21 MIV clients which resulted in US$100 million of hedged local currency loans to microfinance.
General Reading on Forex Risk and Microfinance
CGAP (May 2010) Microfinance Foreign Exchange Facilities Foreign capital investment in microfinance has been booming over the past four years. It can bring important benefits to MFIs, but it also comes with foreign exchange risk.
CGAP Focus Note (June 2009) Asset and Liability Management for Deposit-Taking Microfinance Institutions As MFIs diversify their funding sources, sound asset and liability management (ALM) is critical to help MFIs assess and manage financial risk.
Women’s World Banking (2007) From Dinar to Dollar: The Rise of Local Currency Lending and Hedging in MicrofinanceThis paper highlights recent advances in minimizing foreign exchange risk in microfinance, via both local currency lending by international investors, and risk hedging by microfinance institutions.
CGAP Focus Note (Jan 2006) Foreign Exchange Rate Risk in Microfinance This Focus Note discusses issues related to foreign exchange rate risk in microfinance. It explains what exchange rate risk is, looks at techniques used by MFIs and investors to manage the risk, and makes recommendations on managing and avoiding risk.