Hey! It's been a while since I updated this blog. I recently moved to a new department (again!). I am currently working real close with DG. It's a brand new experience, and I would really love to explore new things.
I am currently looking at is the connection between NDF Market and Spot market. One recent paper mentioned that there is dual connection between the two, which offshore NDF price effected domestic spot price, and vice versa. I also become know that Korea and Philippines allowed NDF to be traded onshore. I wonder what is the reason behind. To my knowledge, NDF is growing because of restrictions available in domestic FX market. Therefore, if authorities are worried with NDF Market, I would suggest to lift partly or mostly the FX restrictions in onshore market, so that hedgers can go onshore to hedge their position, instead of hedging it offshore through NDF. So, why allowing NDF onshore, if you can eliminate the NDF market instead?
Do you have any ideas?
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