Local Currency Financing

FMO understands that borrowing in hard currency can expose businesses in our markets—especially those earning in local currency—to significant exchange rate risks. In certain situations, we are able to offer Local Currency (LCY) Financing: tailored solutions that help our clients manage currency volatility, improve debt sustainability, and build long-term financial resilience.

Our LCY financing solutions are designed to support financial institutions, microfinance institutions (MFIs), and other private sector players in emerging markets and developing economies. By offering loans in local currency, we help our clients better serve micro, small, and medium-sized enterprises (MSMEs), contributing to vibrant and inclusive economic growth.

Why Local Currency Matters

In many of the markets where we operate, long-term financing (particularly local currency) is scarce. This lack of access can limit the ability of businesses to grow sustainably. FMO steps in to fill this gap by offering LCY loans that:

• Reduce exposure to exchange rate volatility
• Improve predictability of financial obligations
• Enhance creditworthiness and debt sustainability
• Inject liquidity into local economies
• Support the development of local capital markets

Our Local Currency Solutions

As one of the leading DFIs in providing LCY financing, we offer three types of local currency solutions, tailored to the needs and realities of each market:

True Local Currency Loans

Fully denominated and settled in local currency, these loans are available in countries where FMO has local bank accounts. We currently offer True LCY in: INR, ZAR, TRY, GEL, KES, UGX, and LKR

Synthetic Local Currency Loans

In markets where we do not have local accounts, we offer synthetic LCY loans. These are denominated in local currency, but disbursed and repaid in hard currency (USD/EUR), with the exchange rate fixed at the time of contracting.

Currency Conversion

We also support clients in converting existing hard currency loans—both disbursed and undisbursed—into local currency, whether True or Synthetic LCY.

Making an Impact

Our LCY financing has already supported clients across sectors and regions:

• We provided a USD 200 million multi-currency syndicated A/B term facility to Khan Bank, Mongolia’s leading universal. The proceeds were earmarked for green financing and fostering a more inclusive and sustainable economy, with 30% of the proceeds targeted towards Green financing, and the remainder earmarked for supporting women, youth, Agri-SMEs and certified SMEs in the sustainable cashmere industry.
• We also provided a re-investment of an existing USD 15mln facility to M-Kopa, a connected asset financing platform that offers millions of underbanked customers access to life-enhancing products and services. Availability of local currency debt financing is seen as a bottleneck for growth in the PAYGO (energy) sector, so our financing is an opportunity to back a market leader in East Afria and will allow the company to continue the growth trajectory of its solar and e-mobility portfolio.

These partnerships demonstrate how local currency lending can unlock growth, stability, and opportunity for businesses and communities alike.

Partnering for Greater Reach

We welcome collaboration with other DFIs, MDBs, and impact investors. Through syndication, we can jointly offer LCY solutions that scale impact and deepen local capital markets.

If you are interested in learning more about our local currency financing solutions, contact us via our general mailbox or reach out to your FMO contact person.