[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-324351-105":59,"doc-detail-324351-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","nondeliverable-forwards-can-we-tell-where-the-renminbi-is-headed-can-we-tell-where-the-renminbi-is-headed","Nondeliverable Forwards - Can We Tell Where the Renminbi Is Headed - Can We Tell Where the Renminbi Is Headed","","Economic commentary analyzing nondeliverable forwards (NDFs) and whether their exchange rates can forecast a currency’s direction, using the Chinese renminbi as an example. It explains how exchange-rate hedging works in practice, why many emerging markets limit foreign access to on-shore forward markets, and how offshore NDF markets developed since the early 1990s. It also discusses settlement in convertible currencies and the risks that may embed a premium in NDF pricing.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/nondeliverable-forwards-can-we-tell-where-the-renminbi-is-headed-can-we-tell-where-the-renminbi-is-headed/324351/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/nondeliverable-forwards-can-we-tell-where-the-renminbi-is-headed-can-we-tell-where-the-renminbi-is-headed/324351.png","ImageObject",300,407,{"name":92,"@type":93},"Genevieve","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-30","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",12,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"What is the purpose of forward markets in currency risk management?","Question",{"text":113,"@type":114},"Forward markets help firms and international investors hedge foreign-exchange exposures by locking in future exchange rates today.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"Why are nondeliverable forwards (NDFs) important for emerging-market currencies?",{"text":118,"@type":114},"Many emerging-market economies restrict foreign access to on-shore forward and financial markets, so NDFs provide an offshore alternative when local hedging is difficult or impossible.",{"name":120,"@type":111,"acceptedAnswer":121},"How are NDF contracts settled compared with typical forward contracts?",{"text":122,"@type":114},"Unlike typical forwards where the foreign currency is delivered, NDFs are settled in a convertible currency, typically U.S. dollars, similar to how futures positions are settled.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},324351,1790170750,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},1374391974585,"https://ap-avatar.wpscdn.com/davatar_276721f389ce27ea32af1340a28f341c","by Patrick Higgins and Owen E.Humpage  \nAfter considerable pressure from theUnited States,China revaluedthe ren-minbi,2.1 percent against the dollar,onJuly 21 and moved from a pegged to amanaged exchange-rate system.Sincethen,the renminbi's value has remainedaround 8.I per dollar,leading many towonder if the recentmove is the first in anear-term series of similar moves or,atleast for now,a one-time event.  \nMany look to the forward exchangemarket for a guess about a currency'sfuture path.Unfortunately,manyemerging-market economies restrictnonresident access to on-shore financialmarkets and,as a consequence,forwardmarkets either do not exist or are under-developed.Since the early 1990s,how-ever,some intermational banks havebeen offering an offshore,over-the-counter market in nondeliverable for-wards(NDFs)for many emerging-market currencies,including the Chineserenminbi.  \nThis Economic Commentary discussesNDFs and their ability to predict wherea currency is headed,using the Chineserenminbi as an example.Recently,thePeople's Bank of China—China's cen-tral bank—announced that it will permitmore domestic banks to participate in itsorward exchange market,following anapplication process that will take aboutsix months.The goal is to develop on-shore markets in which firms can hedgetheir foreign-exchange exposure.Even-tually,such a market will probably sup-plant the NDF market  \n## The Hedge\n\nForward markets exist to provide firmsand intemational investors with a meansof hedging their foreign-exchange  \n# Nondeliverable Forwards:Can We TellWhere the Renminbi Is Headed?\n\nexposures;any prediction about thefuture value of a currency is an ancillaryproduct of the forward market's hedgingactivity.Firms or investors that havemismatched cash flows in different cur-rencies often look to protect themselvesfrom unforeseen changes in foreign-exchange rates.Although many methodsexist for doing so,the forward foreignexchange market,where individuals canbuy and sell foreign currencies for futuredelivery at a known rate today,providesa fairly standardand simple method forhedging exchange risk.  \nTo see how this hedge might work,imagine that a U.Smanufacturing con-cern contracts with a Chinese firm forfinal assembly of its product.As aconse-quence,the U.S.business might beobligated to pay the Chinese company aspecific amount of renminbi upon com-pletion of the job in,say,three months.Although China is currently keeping therenminbi near 8.I to the dollar,the per-sistent talk about a further renminbiappreciation has the U.S.firm con-cermed.An appreciation of the renminbiwould increase the dollar costs of buyingrenminbi three months down the roadand could wipe out the company'sexpected profits from the project  \nIf the U.S.business had access to thenascent on-shore forward market,itcould hedge its exchange-rate risk bycontacting a Chinese bank and buyingrenminbi today at a known exchange ratefor delivery in three months.Thetransactions,of course,would not becostless,and the forward renminbiexchange rate probably would not equalthe current spot value,but the U.S.man-ufacturing firm would know all of thecosts up front and would be able to  \nSepiember 1,2005  \nSince the early 1990s,internationalbanks have been offering nondeliver-able forward(NDF)contracts toclients who need to hedge exposuresin currencies of emerging-marketeconomies.Many also use theexchange rate on these contracts asa best guess of where the emerging-market currency is headed.Theexchange rates on NDFs,however,likely embody a substantial riskpremium that interferes with fore-casting accuracy.  \ncalculate the project's likely profitsbefore proceeding with it.Any subse-quent appreciation of the renminbidollar exchange rate then would be thebank's problem;it would not affect theU.S.business.In three months'time,theU.S.company would complete the for-ward transaction,paying the agreed-upon amount of dollars to the bank andreceiving renminbi from it to completethe contract with the Chinese firm","cbCaieqC1r03wy89","https://ap.wps.com/l/cbCaieqC1r03wy89","pdf",1011995,"English","# Nondeliverable Forwards: Can We Tell Where the Renminbi Is Headed?\n## The Hedge","[{\"question\":\"What is the purpose of forward markets in currency risk management?\",\"answer\":\"Forward markets help firms and international investors hedge foreign-exchange exposures by locking in future exchange rates today.\"},{\"question\":\"Why are nondeliverable forwards (NDFs) important for emerging-market currencies?\",\"answer\":\"Many emerging-market economies restrict foreign access to on-shore forward and financial markets, so NDFs provide an offshore alternative when local hedging is difficult or impossible.\"},{\"question\":\"How are NDF contracts settled compared with typical forward contracts?\",\"answer\":\"Unlike typical forwards where the foreign currency is delivered, NDFs are settled in a convertible currency, typically U.S. dollars, similar to how futures positions are settled.\"}]","Nondeliverable Forwards - Can We Tell Where the Renminbi Is Headed - Can We Tell Where the Renminbi Is Headed | PDF",1789967695,13]