Non-Deliverable Forward or NDF
Non-deliverable forwards or NDFs are forward contracts on financial instruments (usually on foreign currencies) which are cash settled and do not involve the delivery of underlying instrument. NDFs are widely traded for non-convertible or thinly traded or futures trading banned foreign currencies. NDFs are traded over-the-counter and are usually settled in US dollars.
Non-deliverable forward is settled by taking the difference between the agreed upon exchange rate and the spot exchange rate at settlement time. NDFs have fixing date and settlement date. Fixing date is the date at which the price difference between the forward and spot exchange rate is calculated. Settlement or delivery date is the date at which the difference is paid to the receiver; settlement date falls usually 1 or 2 business days after fixing date. Usually NDF trading is done at offshore financial centers.
Non-deliverable forwards are usually used by companies which operate in nations of which currencies are not internationally traded. NDFs can be quoted for periods which range from one month to 1 or 2 years. Most NDF currencies are of emerging counties, and include Indian Rupee (INR), Philippine Peso (PHP), Korean Won (KRW) and Taiwan Dollars (TWD).
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Non-deliverable forward is settled by taking the difference between the agreed upon exchange rate and the spot exchange rate at settlement time. NDFs have fixing date and settlement date. Fixing date is the date at which the price difference between the forward and spot exchange rate is calculated. Settlement or delivery date is the date at which the difference is paid to the receiver; settlement date falls usually 1 or 2 business days after fixing date. Usually NDF trading is done at offshore financial centers.
Non-deliverable forwards are usually used by companies which operate in nations of which currencies are not internationally traded. NDFs can be quoted for periods which range from one month to 1 or 2 years. Most NDF currencies are of emerging counties, and include Indian Rupee (INR), Philippine Peso (PHP), Korean Won (KRW) and Taiwan Dollars (TWD).
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by NobleTrading at
8:36 AM
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