Non-deliverable forward: Difference between revisions
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(NDF). A foreign currency financial derivative contract. An NDF differs from an outright foreign currency forward contract in that there is no physical settlement of two currencies at maturity. Rather, a net cash settlement is made by one party to the other. | (NDF). | ||
A foreign currency financial derivative contract. | |||
An NDF differs from an outright foreign currency forward contract in that there is no physical settlement of two currencies at maturity. Rather, a net cash settlement is made by one party to the other. | |||
NDFs are commonly used to hedge foreign currency risks in emerging markets where local currencies are not freely convertible, or where there are restrictions on capital movements. | |||
An NDF market might then develop in an offshore financial centre, with contracts settled in major foreign currencies, such as the US dollar. | |||
== See also == | == See also == | ||
* [[Contract for differences]] | * [[Contract for differences]] | ||
* [[Foreign exchange forward contract]] | * [[Foreign exchange forward contract]] | ||
Revision as of 15:27, 21 August 2013
(NDF).
A foreign currency financial derivative contract.
An NDF differs from an outright foreign currency forward contract in that there is no physical settlement of two currencies at maturity. Rather, a net cash settlement is made by one party to the other.
NDFs are commonly used to hedge foreign currency risks in emerging markets where local currencies are not freely convertible, or where there are restrictions on capital movements.
An NDF market might then develop in an offshore financial centre, with contracts settled in major foreign currencies, such as the US dollar.
