Non-Deliverable Forward (NDF)
Non-Deliverable Forward is identical to forward contracts, except that it does not involve physical flow of funds, i.e. currency delivery, on the settlement date. Settlement is made only for the difference between the agreed exchange rate and the reference rate.
How do you benefit:
hedging against adverse exchange rate fluctuations,
a leverage effect which permits much larger transactions than in the case of spot contracts (depending on the date and collateral),
a broad range of settlement dates can be negotiated, from 3 to 365 days,
contracts can be concluded up to an authorized limit or against a security deposit starting from 3% of the contract value.
