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Nondeliverable Forward Contract |
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Nondeliverable Forward Contract A forward contracts on an infrequently traded and/or inconvertible currency. The parties to a nondeliverable forward contract agree to buy/sell the underlying currency at a certain time for a certain exchange rate. Profit or loss on the contract comes from the spread between the agreed upon rate and the spot rate for the currency. Corporations with dealings in smaller countries often use nondeliverable forward contracts to hedge against exchange rate fluctuations. These contracts usually exist for between one month and one year. They are generally quoted and settled in U.S. dollars. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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