Non-Deliverable Forward
a.k.a. NDF
A currency forward settled in dollars instead of the actual currency, used for currencies that can't move freely across borders.
A non-deliverable forward (NDF) lets you bet on, or hedge against, a currency you are not allowed to actually take out of its home country. You and a bank agree on an exchange rate for a future date. When that date arrives, nobody hands over the restricted currency. Instead, the difference between the agreed rate and the real rate is paid out in a hard currency, usually US dollars.
NDF markets for currencies like the Indian rupee, Korean won and Brazilian real are huge, sitting offshore in places like Singapore and London. They often hint at where traders think a controlled currency "really" wants to go.
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