Baku, Azerbaijan, June 18, 2026 — The Islamic Corporation for the Development of the Private Sector (ICD) and The Currency Exchange Fund (TCX), headquartered in the Netherlands, have announced a long-term cooperation to jointly develop an Islamic finance-oriented non-deliverable hedging solution aimed at expanding access to local-currency financing in emerging and frontier market currencies. The announcement was made on the sidelines of the Annual Meeting of the Islamic Development Bank (IsDB) Group in Baku, Azerbaijan, and responds to a key development finance challenge: the limited availability of effective foreign-exchange hedging solutions for currencies whose offshore markets are traditionally less liquid.
In many ICD Member Countries, exchange-rate volatility can weaken repayment capacity, increase the cost of financing, and reduce the development impact of hard-currency lending. By working to develop a non-deliverable hedging solution compatible with Islamic finance principles, ICD and TCX aim to provide Multilateral Development Banks, Islamic financial institutions, and development finance partners with a more practical and sustainable pathway to delivering local-currency financing to sovereigns, infrastructure projects, financial institutions, and small and medium-sized enterprises (SMEs). The proposed solution is expected to be structured under the broader guidance of the Tahawwut (Hedging) Master Agreement developed by IIFM and ISDA, the established framework for Islamic hedging transactions.
The potential reach of this cooperation is substantial. Based on TCX’s published currency coverage and ICD’s sovereign shareholder base, the current overlap extends to 43 of ICD’s 56 sovereign Member Countries, equivalent to 76.8% of the sovereign member-country base. This is particularly significant in markets where private hedging solutions are limited or entirely unavailable and deliverability of currencies is difficult or not allowed altogether.
For TCX, the cooperation is key to expand its product offering to clients seeking Islamic finance-compatible hedging alternatives. Today, non-deliverable hedging solutions structured under the IIFM/ISDA framework and relevant to emerging and frontier market currencies are not available, and this initiative directly addresses that gap.
ICD has already demonstrated its capacity to deliver local-currency financing in selected markets. In Kazakhstan, ICD completed two tenge-denominated transactions, a KZT 2 billion financing facility in June 2023 and a KZT 2.4 billion facility in November 2024, both aimed at supporting private sector enterprises and SMEs. The first was funded through a KZT Sukuk issuance, while the second was facilitated through an Islamic cross-currency swap structure, enabling the client to benefit from fixed KZT debt-service costs while ICD continued to receive USD repayments from its swap counterparty. These transactions in the Commonwealth of Independent States region reflect ICD’s commitment to structuring innovative financing solutions that meet real borrower needs in local-currency terms.
Commenting on the cooperation, Dr. Khalid Khalafalla, Acting Chief Executive Officer of ICD, stated: “Local-currency financing is a critical development tool, particularly in markets where exchange-rate volatility can place pressure on borrowers. Through this cooperation with TCX, ICD aims to help make Islamic finance-compatible local-currency solutions more practical and accessible, while supporting prudent risk management for development finance institutions.”
Sam Aidoo, Chief Investment Officer of TCX, further commented:“ With demand for Islamic finance rising worldwide, TCX is proud to partner with ICD to develop a tailored hedging solution that protects borrowers from FX risk and promotes the use of local currency in ICD’s Member Countries. TCX and ICD are natural partners for designing and implementing innovative solutions, with a shared ambition of advancing capital markets development.”
This cooperation reflects ICD’s broader mandate to catalyze private sector development across its Member Countries by deploying innovative financial solutions. By combining TCX’s established role as a price-maker and market-maker in frontier and emerging market currencies with ICD’s expertise in Islamic finance structuring and its relationships across 56 sovereign Member Countries, the partnership is designed to generate meaningful and lasting impact for borrowers and development finance partners across the IsDB Group’s operational footprint.
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About ICD
The Islamic Corporation for the Development of the Private Sector (ICD) is a multilateral development finance institution and member of the Islamic Development Bank (IsDB) Group. Established in November 1999 and headquartered in Jeddah, Saudi Arabia, ICD supports economic development in its 56 member countries by providing financial assistance to private sector projects in accordance with Shariah principles. With an authorized capital of USD 4.0 billion and more than 25 years of operational excellence, ICD complements IsDB’s activities by promoting capital market development, best management practices, and enhancing the role of market economies. ICD holds strong credit ratings of A2 by Moody’s, A+ by Fitch, and A by S&P. For more information, visit www.icd-ps.org and follow ICD on X (@icd_ps), LinkedIn (@icdps), Facebook (@icdps), and YouTube (@icdps).
About The Currency Exchange Fund (TCX)
TCX is a development finance initiative backed by a shareholder base that includes FMO, EBRD, KfW and IFC, as well as the European Commission and Dutch, Swiss, British, French, and German governments and other DFIs and microfinance vehicles. TCX protects borrowers in emerging and frontier markets from currency risk by facilitating currency hedges that transfer the risk to TCX’s balance sheet. TCX offers derivative instruments – cross-currency swaps and FX forwards – in currencies not or insufficiently covered by commercial parties. Since starting operations in 2007, TCX has hedged a total volume of over USD 20 billion in development loans across 71 currencies.
Media Contact
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TCX Info
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