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FINANCIAL MARKET COURSES

FX Forward Market – Non_Deliverable Forwards (NDFs)

Non-deliverable forwards (NDFs) have seen incredible growth as a means of hedging the volatility in the currencies of emerging economies. In Asia, their use has grown tenfold since the turn of the century. As trade between developed and developing economies continues to increase, so too does the level of demand for methods of hedging against adverse currency fluctuations.

 

This course describes how NDFs are used to lock in future exchange rates, lists the details included in NDFs contract, and explains how they are traded. It also explores the payoff achieved through the use of an NDF.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Describe the basics of NDFs, why they are used, and by whom

    Recognize how NDFs are quoted on trading platforms

    Explain the process by which the settlement amount is calculated under an NDF

  • COURSE OUTLINE

    Topic 1: Basics of NDFs

    What are NDFs?

    Why Use an NDF?

    Features of an NDF

    Typical Quotation Screen

    Information Required To Complete Trade

    NDF Prices Versus Forward Outrights Prices

    Synthetic Foreign Currency Loans

    Topic 2: Calculating NDF Settlement Amounts

    Calculating the Settlement Amount in an NDF

    o An Appreciation of the Nonconvertible Currency

    o A Depreciation of the Nonconvertible Currency

    Hedging Final Payments using NDFs

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    45 Minutes

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