Unlocking Local Currency Lending: Foreign Exchange Risk in Agricultural Finance

This resource appears in:

The note emerged from conversations with stakeholders at various levels of the agricultural value chain who expressed concerns about managing the foreign exchange (FX) exposure in their businesses – traders who pre-finance farmers and financiers who lend to smallholders and agri-businesses, among others. While a reasonable body of literature covers management of FX risk in microfinance, relatively little research has been conducted targeting FX risk management in smallholder agricultural lending. This briefing seeks to lay the foundation for further research, collaboration, and experimentation that can lead to the development and testing of solutions for managing the FX risk inherent in agricultural value chains. This briefing outlines the particular challenges of FX management in agriculture and profiles the landscape of existing solutions – drawing broadly from microfinance and industry solutions when relevant. The note concludes with recommendations for how lenders, donors, and other partners can develop interventions that will help mitigate these FX risks in the short to medium term.

Unlocking Local Currency Lending: Foreign Exchange Risk in Agricultural Finance  -  English (en)

Document Information

Document Type Technical Note
Author Initiative for Smallholder Finance
Year of Publication 2016
Publisher Initiative for Smallholder Finance
Number of Pages 11 pp.
Region / Country Global /
Primary Language English (en)
Keywords Agricultural Finance, Agriculture, SMEs, Risk Management, Foreign Exchange Risk
Related Resources