September 13, 2017
OGResearch has been portrayed as a creative frontier-market researcher by one of our clients, The Currency Exchange Fund (TCX).
The fund, the pioneer in enabling long-term local currency financing in frontier markets, has relied on OGResearch’s unrivalled macroeconomic modeling and forecasting service to determine a currency price in countries with no reliable economic data and underdeveloped financial sectors.
The fund’s CEO Ruurd Brouwer told the Development Finance magazine in an interview published on the eve of TCX’s 10th anniversary conference:
"Our Czech business partner OGResearch developed individual country models to determine a currency price based on estimated growth, inflation rates, commodity price development and other variables like demographic trends. I like to call it applied creativity. These models form the basis of our pricing used to open up these markets."
Two-hundred transactions have been realised in local currency, thanks also to our "applied research creativity", as reported by the Development Finance magazine.
Making local currency borrowing possible in Myanmar, Sierra Leone, Madagascar, Haiti, and many other frontier markets is the “hedging innovation” provided by TCX in partnership with our Prague- and Budapest-based research team. It was our state-of-the-art Forecasting and Policy Analysis System (FPAS), the cornerstone of our regular Macro Forecast service, that has allowed TCX to price currency and macroeconomic risks in the most frontier markets.
The fund offers FPAS-based pricing in 26 countries:
"Prior to TCX it was impossible for international investors to offer local currency to clients in most frontier markets. There were simply no data from which a price could be derived. TCX partnered with OGResearch and successfully applied the so-called Forecasting and Policy Analysis System (‘FPAS’) to price currency and macroeconomic risks in the most frontier markets. The FPAS was originally created by the IMF and central banks for inflation targeting purposes. OGResearch redesigned the models so these could be used for price setting of hedges, when no market data is available."
Our Managing Partner David Vavra will be happy to meet in Amsterdam where he is participating at TCX’s anniversary conference on 20-21 September 2017.
David features as a key panelist in a session on “Pricing the impossible: how to price currency derivatives in frontier markets?” on the TCX’s conference day on Thursday, 21 September 2017.
Feel free to contact us to take a 30-day free trial to the OGResearch's proprietary online platform, the Macro Portal. You will receive regular updates on economic performance and assessments of macroeconomic and country risks in dozens of frontier and emerging markets.
TCX, along with the EBRD, has supported the development and publication of FPAS models but assume no responsibility for the accuracy of the data or models. These institutions, and OGResearch, equally assume no responsibility for any decisions based on the use of them.