Foreign exchange risk remains a significant problem for microfinance institutions (MFIs). Many sources of potential funding for MFIs remain untapped due to the high risks of currency devaluation faced by these funding sources. Specifically, debt capital is available for MFIs but foreign exchange risk is a potential deterrent. This paper reviews current practices in the management of foreign exchange risk for and by MFIs. The advantages and disadvantages of these practices are discussed and alternative practices proposed.
Peter R. Crabb is a Professor of Finance and Economics in the School of Business and Economics, Northwest Nazarene University.
Journal of Microfinance
Issue and Volume
BYU ScholarsArchive Citation
Crabb, Peter R.
"Foreign Exchange Risk Management Practices of Microfinance Institution,"
Journal of Microfinance / ESR Review: Vol. 6
, Article 4.
Available at: http://scholarsarchive.byu.edu/esr/vol6/iss2/4