Publication: Exchange Rate Risk : Allocating Exchange Rate Risk in Private Infrastructure Projects
Each year developing countries seek billions of dollars of investment in their infrastructure, and private investors, mostly in rich countries, seek places to invest trillions of dollars of new savings. Private foreign investment in the infrastructure of developing countries would seem to hold great promise. But foreign investors must cope with volatile developing country currencies. Many attempts to do so have created as many problems as they have solved. This note proposes that investors take on all financing-related exchange rate risk, even though this may mean higher tariffs for consumers as a premium for bearing that risk.
“Gray, Philip; Irwin, Timothy. 2003. Exchange Rate Risk : Allocating Exchange Rate Risk in Private Infrastructure Projects. Viewpoint: Public Policy for the Private Sector; Note No. 266. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/99535ff1-15ad-54e6-8cc6-9cc6e325f4c0 License: CC BY 3.0 IGO.”
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