Foreign Currency Risk Management Strategies for Impact Investment Funds in Frontier Markets

Strategies for Managing Local Currency Risk in Frontier and Emerging Markets (July 2022) analyses the approaches available to hard-currency funds investing in frontier and emerging markets to manage local currency exposure, providing an overview of common strategies and tools for local currency investing at both fund and investment level.

The report emphasises the importance of understanding each country’s monetary, economic and currency dynamics when assessing risk and return, and highlights how balancing instruments and investment risk factors can inform portfolio construction.

We recommend readers consider this report in conjunction with our research on liquidity mechanisms and on design considerations for technical assistance delivery.

Research by ISF Advisors, commissioned by Small Foundation.