What does non-deliverable forward contracts meaning?

What does non-deliverable forward contracts meaning?

The profit or loss is calculated on the notional amount of the agreement by taking the difference between the agreed-upon rate and the spot rate at the time of settlement. 1:16.

What are non-deliverable options?

A non-deliverable option is an option cash-settled for difference at its maturity, rather than by delivery of the underlying asset. For example, a non-deliverable currency option is settled by a net cash payment, rather than delivery of the underlying foreign currency.

Are NDFs swaps?

A non-deliverable forward (NDF) is a straight futures or forward contract, where, much like a non-deliverable swap (NDS) With most swaps,, the parties involved establish a settlement between the leading spot rate and the contracted NDF rate. The settlement is made when both parties agree on a notional amount.

What are NDFs used for?

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An NDF is an efficient way to hedge a foreign exchange (FX) exposure against non-convertible currencies such as the Argentinian peso, Taiwanese dollar, Korean won, etc. It is conceptually similar to a forward transaction with the difference that there is no settlement in the non-convertible currency.

How are non deliverable forwards settled?

NDFs are settled with cash, meaning the notional amount is never physically exchanged. The only cash that actually switches hands is the difference between the prevailing spot rate and the rate agreed upon in the NDF contract.


This growth is remarkable in that three currencies with large NDF markets – the Brazilian real (BRL), the Indian rupee (INR) and the Russian rouble (RUB) – depreciated notably vis-à-vis the US dollar during the period.

Is Thai baht deliverable?

The Thai baht is the official currency of Thailand. The USD/THB exchange rate is a foreign exchange spot rate that measures the relative value of the two currencies, the Thai baht and the U.S. dollar. The figure is equal to the number of Thai baht that can be exchanged for one U.S. dollar.