Most developing economies rely on foreign capital to finance their infrastructure needs. These projects are usually structured as long-term (25–35 years) franchises that pay in local currency. If investors evaluate their returns in terms of foreign currency, exchange rate volatility introduces risk that may reduce the level of investment below what would be socially optimal. This paper proposes a mechanism with very general features that hedges exchange...
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تفاصيل
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2023/9/19
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ورقة عمل خاصة ببحوث السياسات
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WPS10568
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1
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2023/9/19
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Disclosed
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How to Deal with Exchange Rate Risk in Infrastructure and Other Long-Lived Projects