Currency mismatches are detrimental to hard-currency borrowers in frontier markets, as sudden and steep
depreciations of their local currencies are overly common, resulting in ballooning debt in local-currency terms. This dynamic is reflected in today’s frontier-market debt crisis that is to a large extent the result of a stronger US dollar and rising interest rates. Exchange-rate risk hedging solutions are needed to protect borrowers and lenders, but these are absent for frontier markets.