Press Release

OFID hosts local currency workshop held by the Currency Exchange Fund

39/2008 December 15, 2008 Vienna, Austria
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The OPEC Fund for International Development (OFID) hosted a workshop last week at its Vienna Headquarters on local currency finance. The event was held under the auspices of the Currency Exchange Fund (TCX) of the Netherlands. Launched in September 2007, TCX is a special purpose fund that provides currency and exchange rate risk management products to investors active in emerging markets. The main objective is to catalyze the development of long-term finance in local currency in developing countries.

In his welcome address, Mr. Suleiman J. Al-Herbish, OFID Director-General, said that “local currency financing is one of the most important issues facing development institutions today.” He added that OFID was “fully conscious of the need to avoid currency mismatches in its projects as borrowers are often unable to structure hard currency assets or income flows to offset their foreign currency debt.” Local currency financing therefore could provide a solution, he said. OFID’s mandate, Mr. Al-Herbish said, was to focus the majority of its activities in low-income countries often referred to as “frontier.” “This term is not inappropriate,” he explained, as “economic stability, including components such as inflation and exchange rate, cannot be relied upon.” Local currency finance, he continued, was therefore a high priority issue for these countries. The Director-General said that with the inception of TCX, it was anticipated that “efficient hedging will be available to international finance institutions in a much wider range of currencies,” which is why OFID “has supported TCX as a shareholder,” he added.

In his response, Mr. Joost Zuidberg, Managing Director, TCX Investment Managing Company, thanked Mr. Al-Herbish and expressed his appreciation of OFID’s hospitality in hosting the Workshop. “TCX counts OFID as one of its prized shareholders,” said Mr. Zuidberg. He said that the Workshop provided a means for TCX to “tighten its relationships” with OFID and other investors and was very encouraged by participants’ interest in the event. TCX has recently been rated by Standard and Poor’s as AA- with a stable outlook. TCX expects business volumes to pick up significantly. This is because recent market volatility has made emerging market borrowers more aware of the potential consequences of financing themselves in hard currency, while their revenues are denominated in local currencies.

The Workshop covered topics such as TCX Concept and Pricing Mechanics; Valuation and Accounting for Local Currency Loans; and, Benchmark Modeling and Yield Curve Extension. Participants included representatives of the European Investment Bank, Finnfund, the International Finance Corporation, the Japan Bank for International Cooperation, the KfW Bankengruppe, the Netherlands Development Finance Company, and the Oesterreichische Entwicklungsbank AG. Also in attendance were officials from OFID and its sister institutions the Saudi Fund for Development and the Islamic Corporation for the Development of the Private Sector.

More information on TCX can be found at www.tcxfund.com