Chinese-led AIIB plans to launch local currency loans in India

Beijing, Jan 30 (IANS) Chinese-led Asian Infrastructure Investment Bank (AIIB) might launch local currency financing in some Asian countries, including its top borrower India, later this year.

The move announced by bank's President Jin Liqun aims at reducing cross-border investment risks caused by exchange-rate fluctuations.

Besides India, which is also the second largest stakeholder in the multilateral bank, Pakistan and Indonesia are other countries where the service will be made available. 

The service is used to hedge against foreign exchange-rate risks arising from the settlement in US dollars. The risk grew when the greenback became stronger against currencies in many emerging economies last year.

Rising debt financing costs from high global interest rates and cross-border investment uncertainties as a result of trade tensions have raised concerns about sustainable infrastructure financing, Jin said.

"Recent currency volatility in emerging markets is a cause for concern," said an AIIB report released on Tuesday. "It is likely to lead to delays in projects, weakening the outlook for the project pipeline."

"There is an urgent need to redouble efforts to mobilize private capital," Jangping Thia, principal economist of the AIIB Strategy, Policy and Budget Department, was quoted as saying by China Daily.

The Chinese-led AIIB has 93 approved members worldwide.