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Non-Deliverable Forward
(redirected from Nondeliverable Forward)

    Also found in: Wikipedia 0.01 sec.
Non-Deliverable Forward
A forward contract on a low-volume or inconvertible currency that cannot be settled by delivery of the underlying. In a non-deliverable forward, the parties net the difference between the exchange rate listed in the contract and the spot rate, and one party pays the other that difference. They are usually settled in U.S. dollars. Multinational corporations sometimes use non-deliverable forwards to hedge against risk associated with comparatively illiquid currencies.
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Recently, a market in nondeliverable forwards (NDFs) has arisen to provide cover for companies trading in renminbi.
Betting on a renminbi revaluation by Economic Trends
But the share of dollar deposits continued to decline despite some stabilization at the margin in the interest differential in 2002, pointing to an additional catalyst--rising expectations of renminbi appreciation, as indicated by the RMB/$ forward exchange rate in the nondeliverable forward market (Ma and McCauley 2003).
Capital flows, overheating, and the nominal exchange rate regime in ... by Hu, Fred / The Cato Journal
Other financial market evidence The top panel of figure 4 shows the forward price of renminbi from the offshore nondeliverable forward market.
Countering contagion: Does China's experience offer a blueprint? by Ahearne, Alan G.; Fernald, John G.; Loungani, Prakash / Economic Perspectives
 
 
 
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