MICROCAPITAL BRIEF: UN’s Livelihoods and Food Security Trust Fund (LIFT) Provides $10m to The Currency Exchange Fund (TCX) to Subsidize Third-party Lending in Local Currency to Microfinance Institutions in Myanmar

The Currency Exchange Fund (TCX), which is based in the Netherlands, recently raised USD 10 million from the UN-managed Livelihoods and Food Security Trust Fund (LIFT) to reduce the cost of foreign-exchange hedging for “impact lenders” funding microfinance institutions (MFIs) in Myanmar. TCX provides this hedging service, absorbing the currency-exchange risk on the loans, so the lenders can commit US dollars while the MFIs access funding denominated in kyat. Via multiple microloan repayment cycles over three years, the MFIs are expected to gain sufficient liquidity from the LIFT-supported facility to fund 400,000 microloans.

LIFT Fund Director Andrew Kirkwood said his organization “is committed to promoting and developing the rural financial markets to be inclusive, so the poor, women, farmers, small businesses, landless and internally displaced people can access quality financial services and take advantage of economic opportunities.”

As of 2016, LIFT funds 42 institutions serving 1 million households in Myanmar. TCX, which has 22 investors, specializes in hedging emerging markets currencies to support wholesale microfinance loans. Since its establishment in 2007, it has participated in investments worth a total of USD 3.6 billion. TCX is managed by the TCX Investment Management Company, which is wholly owned by Cardano Development, a Netherlands-based institution seeking to improve financial markets and risk management in developing countries.

Written by the MicroCapital Team

Sources and Additional Resources

Information provided directly to MicroCapital by TCX and Cardano Development

TCX
http://www.tcxfund.com/

LIFT
http://lift-fund.org

Cardano Development
http://www.cardanodevelopment.com/

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