Yes, currency exchange rates do affect the value of the loan repayments. As the lender, you bear the risk of any losses due to fluctuations in exchange rates.
Your loan is made in GBP and will be converted into USD by CARE for the purposes of funding an original loan in USD to a local development partner. The local partner then uses these funds to make an entrepreneur loan to an entrepreneur. Entrepreneur loans may be made in USD or in local currency - if the latter, the funds will be converted into local currency from USD. The entrepreneur makes repayments under their entrepreneur loan in local currency (or USD, as applicable), which the local partner will convert into USD if necessary in order to make repayments in USD to CARE under the original loan. These repayments will then be finally converted by CARE from USD back to GBP, and used to make loan repayments in GBP to you and the other lenders who contributed to the loan. The conversions from one currency to another may result in foreign exchange losses which affect the value of loan repayments.
Additionally, where entrepreneur loans are made in local currency, the original loans and entrepreneur loans are structured in such a way as to protect entrepreneurs and the local development partners from foreign exchange rate fluctuations between the local currency and USD when they make repayments under the entrepreneur loans and the original loans respectively. For more information, please see the our Terms of Use.
Exchange rates fluctuate over time, so each instalment you receive in GBP will differ slightly to the forecast on the repayment schedule attached to each entrepreneur profile. Actual repayments may sometimes be less than the forecasted repayment value. If there is any exchange rate gain then this will be retained by CARE to help with our operational costs.
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