Non-Deliverable Forwards

Non-Deliverable Forwards (NDFs) are conceptually similar to forward foreign exchange contracts; the difference is that they do not require physical delivery of the non-convertible currency.

A (Notional) principal amount, forward exchange rate and forward date are all agreed at the contract's inception. At maturity, the difference between the contracted forward rate and the fixing rate is settled in the convertible currency.

NDFs are cash-settled currency forwards which provide an offshore mechanism to hedge currencies which were previously considered "unhedgeable"; either due to emerging markets suffering from illiquidity or regulatory/settlement constraints.

NDFs offered by Saxo

NDFs can be traded forward up to 1 year (3 months for CNY).

Net Open Position (NOP) Limits by currencies:

  • USD 50m – Brazilian Peso, Chinese Renminbi, Indian Rupee, South Korean Won, New Taiwanese Dollar
  • USD 30m – Chilean Peso, Malaysian Ringgit
  • USD 10m – Indonesian Rupiah, Columbian Peso
  • USD 5m – Philippine Peso