NDF non-deliverable forward Non-deliverable forward is often used to measure the expectation of RMB appreciation in overseas markets. Non-deliverable forward is a common financial vocabulary at present, which is often used to measure the expectation of RMB appreciation in overseas markets. Non-deliverable forward is called non-deliverable forward, abbreviated as NDF. Non-deliverable forward contracts are traded in the offshore OTC market, so they are usually called overseas non-deliverable forwards. The NDF market originated in the 1990s, and it provided hedging function for the currencies of China, Indian, Vietnamese and other emerging market countries. Almost all NDF contracts are settled in US dollars. The currencies of Asian emerging market countries, such as RMB, Vietnamese dong, Korean won, Indian Rupee and Philippine peso, all have NDF markets. Companies that trade with these countries or have branches can hedge through NDF transactions to avoid exchange rate risks. Another function of NDF market is to analyze the expectation of future exchange rate trends of these countries. Since RMB is not freely convertible at present, it is very beneficial to understand the basic knowledge of NDF market and pay attention to the exchange rate trend of RMB. Pan Da will introduce the overseas non-deliverable forward (NDF) market of RMB to investors today. What is a forward contract? Forward contract is a common financial derivative, which is not only widely used in the foreign exchange market, but also in other occasions such as bond investment. Forward contract refers to a contract in which both parties agree to exchange financial assets at a fixed price on a certain date in the future. Forward contracts need to specify the subject matter, validity period and execution price. The difference between forward contracts and futures contracts mainly lies in the flexibility of forward contracts, while futures contracts are standardized contracts. As the futures contract transaction adopts the daily debt-free settlement system, the performance risk is lower and the liquidity is greater. Because of its poor flexibility and liquidity, forward contracts are generally traded over the counter, while futures contracts are generally traded on exchanges. Calculation of RMB NDF contract price The forward exchange rate contract price is not only related to the expected exchange rate trend, but also closely related to the interest rates of the two currencies. Domestic media often equate the one-year NDF exchange rate of RMB with the overseas market's expectation of RMB exchange rate one year later, which is an imprecise calculation method. When the spread between China and the United States is too large, this wrong algorithm can easily mislead investors' decisions. The above formula is RMB forward exchange rate formula, where F is RMB forward exchange rate, S is RMB spot exchange rate, R is US dollar interest rate, rf is RMB interest rate, the term is T-t, and E is natural logarithm. The calculation method commonly used by domestic media ignores the price difference between China and the United States, which is a very inaccurate calculation method. Investors must pay attention to this. The price trend of RMB one-year NDF contract may be illustrated by the data on June 27th: RMB one-year NDF exchange rate is 6.45 13, RMB one-year interest rate is 4. 14%, and US dollar one-year interest rate is 2.00%. F = 6.45 13 * (1+2.00%)/(1+4.14%) = 6.3187 It can be seen that on June 27th, the one-year NDD of RMB was 6. Due to the recent expectation of RMB interest rate hike, the price of RMB NDF contract rose slightly. After reading the correct calculation method proposed above, investors can easily know that this is not because the pressure of RMB appreciation has decreased. Determinant of RMB NDF market price fluctuation The change of RMB appreciation expectation is the main reason for RMB NDF contract price fluctuation. The expectation of RMB appreciation is mainly determined by the following aspects: China officials speak. American officials spoke. China's trade surplus. China foreign exchange reserves. China's economic growth. Inflation rate in China. In addition, the NDF contract price of RMB is also affected by the following reasons: interest rate adjustment in China. American interest rate adjustment. RMB NDF contract types RMB NDF contracts are traded in the offshore OTC market, including 1 month, 3 months, 6 months, 9 months and 12 months. Generally speaking, the company's fiscal year is generally one year, and there is little demand for hedging for more than one year, so it is not set. To sum up, the non-deliverable forward (NDF) market can be used for foreign trade and multinational companies to avoid RMB exchange rate risks, and can also be used to judge the expectation of RMB appreciation. However, investors should pay attention to the fact that it is incorrect to simply equate the one-year NDF contract price with the expectation of RMB exchange rate in overseas markets one year later. When the interest rate in China is higher than that in the United States, the expectation of RMB exchange rate in overseas markets is slightly higher than the wrong conclusion drawn by the media based solely on the NDF contract price. It is very important for investors to master the knowledge of correctly calculating the expectation of RMB appreciation according to the NDF contract price, so as to avoid the possibility of investment mistakes caused by wrong information! NDF Corporation English: Digital New Fashion Network official website: www.NDFweb.cn NDF Corporation's full English name is New Digital Fashion, which means "Digital New Fashion" in Chinese! As can be seen from the literal meaning, NDF's consistent philosophy is to highlight "novelty" and "fashion"! Strive to build a noble website! Development and design of professional website template. Company philosophy: take the brand line and put people first! Another explanation: Non-deliverable forwards (NDF) are mainly used in currencies of countries with foreign exchange controls. At present, the non-deliverable forwards of RMB, Korean won, new Taiwan dollar and other currencies in Asia are quite active. The bank acts as an intermediary for non-deliverable forward foreign exchange transactions. Based on different views (or purposes) on the exchange rate, the supply and demand sides sign a non-deliverable forward transaction contract to determine the forward exchange rate. When the contract expires, only the difference between the exchange rate and the actual exchange rate needs to be settled. The settlement currency is a freely convertible currency (generally US dollars), and it is not necessary to deliver the principal of NDF (restricted currency). The term of NDF is usually between several months and several years, and the main trading varieties are varieties of one year or less. Contracts of more than one year are usually not active enough. ADF neutral detergent fiber plant feed, such as general forage, fodder, roughage, etc., is decomposed by neutral detergent (3% sodium dodecyl sulfate), and most cell contents, including fat, sugar, starch, protein, etc., are dissolved in the detergent, collectively referred to as neutral detergent hydrolysate (NDS), and insoluble residues are neutral detergent fiber (NDF), mainly hemicellulose, cellulose, lignin, silicate and so on.