What is NDF? After googling, I find out that it stands for Non-Deliverable Forward. man.. What is that? It's pretty similar with futures transactions, but OTC. You buy forward, and sell forward, at the settlement date, you net them, and settle the rate spread. Well, isn't life beautiful? It makes hedging transactions easier. In an emerging market like Indonesia, free float regime but highly regulated, NDF's transaction is increasing. People outside Indonesia, who want to invest in onshore market, do hedge their open rupiah position with NDF (source: people in the industry).
Because of it's high demand, NDF even signficantly corelated with USD/IDR in onshore market.
Let's discuss this later... sleepy...
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