Non-Deliverable Forwards

As a short-term currency derivative instrument, a non-deliverable forward contract is essentially a cash-settled outright forward forex contract on the price of a foreign currency at the contracted settlement date.

The profit or loss on the notional value of the contract is adjusted between two counterparties based on the difference between the contracted forward rate and the prevailing spot rate. Settlement is made is US dollars.

For more information on using non-deliverable forward contracts, contact an International Banking Foreign Exchange Specialist.