Prohibiting Facilitation of NDF Related Transactions
Ref No : 11/16/09 13 Nov 2016 Embargo : For immediate release
Bank Negara Malaysia would like to state that there is no change in the Foreign Exchange Administration (FEA) rules and there is no introduction of any new measures. Ringgit remains as a non-internationalised currency, thus any offshore trading of ringgit such as ringgit non-deliverable forward (NDF) is not recognized. The Bank is taking measures to reinforce existing rules that have been in place to prohibit facilitation of ringgit NDF. The Bank would like to remind all market participants to observe compliance with the existing FEA rules and the Malaysian licensed banks must avert from facilitating any foreign exchange (FX) transaction that could be related to offshore ringgit NDF market activities.
Source: http://www.bnm.gov.my/index.php?ch=en_press&pg=en_press&ac=4295&lang=enWhat the hack is NDF???
What is a 'Non-Deliverable Forward - NDF'
A non-deliverable forward (NDF) is a cash-settled, short-term forward contract in a thinly traded or nonconvertible foreign currency against a freely traded currency, where the profit or loss at the settlement date is calculated by taking the difference between the agreed upon exchange rate and the spot rate at the time of settlement, for an agreed upon notional amount of funds. The gain or loss is then settled in the freely traded currency.
NDFs are commonly quoted for time periods from one month up to one year; are most frequently quoted and settled in U.S. dollars; and have become a popular instrument for corporations seeking to hedge exposure to foreign currencies that are not internationally traded or whose trade is limited or legally restricted in the domestic market.
Read more: Non-Deliverable Forward - NDF Definition | Investopedia http://www.investopedia.com/terms/n/ndf.asp#ixzz4QKOhSem1
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