Non-Deliverable Forward


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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.
References in periodicals archive ?
Non-deliverable forwards are used to hedge or speculate against currencies when exchange controls make it difficult for foreigners to trade in the spot market directly.
Banks hedging of the US dollar via non-deliverable forward (NDF) contracts with global banks may stop soon, because of the recent directive of the Nepal Rastra Bank (NRB).
One-year non-deliverable forward contracts traded in Hong Kong continued to express expectations for future yuan depreciation, with quotes at 6.
Non-deliverable forward contracts with a 1-year tenor in Hong Kong traded at 6.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.
Separately, non-deliverable forwards (NDFs) are to be formally listed on Hotspots wholly-owned swap execution facility (SEF), previously called Javelin, in the coming weeks.
Foreign banks have been sent a form to sign, which asks them for an 'unconditional representation and commitment' to stop trading in any offshore Malaysian ringgit MYRNDFOR= non-deliverable forwards or offshore derivatives.
The deal is intended to accelerate Bats' plans to offer trading of non-deliverable forwards for the foreign exchange market.

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