Non-deliverable forward: Difference between revisions
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imported>Doug Williamson (Layout.) |
imported>Doug Williamson (Link with Derivative instrument and Non-deliverable option pages.) |
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(NDF). | (NDF). | ||
A foreign currency financial derivative contract. | A foreign currency financial derivative contract. | ||
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== See also == | == See also == | ||
* [[Contract for differences]] | * [[Contract for differences]] | ||
* [[Derivative instrument]] | |||
* [[Foreign exchange forward contract]] | * [[Foreign exchange forward contract]] | ||
* [[Non-deliverable option]] | |||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
Latest revision as of 11:45, 13 March 2017
(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.
