{"id":359909,"date":"2026-04-03T17:26:59","date_gmt":"2026-04-03T11:56:59","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=359909"},"modified":"2026-04-03T17:26:59","modified_gmt":"2026-04-03T11:56:59","slug":"non-deliverable-derivative-ndd-market","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/non-deliverable-derivative-ndd-market\/","title":{"rendered":"Non-Deliverable Derivative (NDD) Market"},"content":{"rendered":"<p><strong>News: <\/strong>The Reserve Bank of India barred banks from NDD contracts in rupee to curb misuse, stabilize currency, and improve transparency.<\/p>\n<h2>About Non-Deliverable Derivative (NDD) Market<\/h2>\n<figure id=\"attachment_359910\" aria-describedby=\"caption-attachment-359910\" style=\"width: 470px\" class=\"wp-caption aligncenter\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\" wp-image-359910\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/04\/Source-Outlook-Money.jpg?resize=470%2C310&#038;ssl=1\" alt=\"Non-Deliverable Derivative (NDD) Market\" width=\"470\" height=\"310\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/04\/Source-Outlook-Money.jpg?resize=300%2C198&amp;ssl=1 300w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/04\/Source-Outlook-Money.jpg?resize=1024%2C675&amp;ssl=1 1024w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/04\/Source-Outlook-Money.jpg?resize=768%2C507&amp;ssl=1 768w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/04\/Source-Outlook-Money.jpg?w=1134&amp;ssl=1 1134w\" sizes=\"auto, (max-width: 470px) 100vw, 470px\" \/><figcaption id=\"caption-attachment-359910\" class=\"wp-caption-text\">Source &#8211; Outlook Money<\/figcaption><\/figure>\n<ul>\n<li>An NDD is a <strong>derivative contract<\/strong> where <strong>parties agree on a future rupee exchange rate <\/strong>but <strong>settle differences in cash,<\/strong> usually in US dollars.<\/li>\n<li><strong>Mechanism<\/strong>\n<ul>\n<li><strong>Agreement on Exchange Rate:<\/strong> Two parties enter into a contract and agree on a future exchange rate for the rupee.<\/li>\n<li><strong>No Physical Delivery:<\/strong> Due to capital controls, offshore investors cannot trade the rupee physically, so the contract does not involve actual currency delivery.<\/li>\n<li><strong>Calculation of Difference:<\/strong> On the settlement date, the difference between the agreed exchange rate and the prevailing market rate is calculated.<\/li>\n<li><strong>Cash Settlement:<\/strong> The calculated difference is settled in cash, usually in US dollars, instead of exchanging the rupee.<\/li>\n<li><strong>Purpose of Structure:<\/strong> This mechanism allows participants to take positions on the rupee\u2019s movement without handling the currency itself.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Offshore Nature:<\/strong> NDD trades occur <strong>outside India in financial hubs<\/strong> and <strong>remain outside RBI control.<\/strong><\/li>\n<li><strong>Eligibility:<\/strong> It is mainly used by <strong>foreign investors, hedge funds, and global banks who cannot freely access the rupee market.<\/strong><\/li>\n<li><strong>Role in Price Discovery:<\/strong> NDD markets influence rupee expectations and often act as a price discovery mechanism before Indian markets open.<\/li>\n<li><strong>Limitations:<\/strong> NDD markets distort price discovery and are misused for speculative activities through repeated contract entry and exit.<\/li>\n<li><strong>Significance for India:<\/strong> The RBI move reduces speculative activity, limits misuse, stabilises rupee volatility, and strengthens the onshore market.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>News: The Reserve Bank of India barred banks from NDD contracts in rupee to curb misuse, stabilize currency, and improve transparency. About Non-Deliverable Derivative (NDD) Market An NDD is a derivative contract where parties agree on a future rupee exchange rate but settle differences in cash, usually in US dollars. Mechanism Agreement on Exchange Rate:&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/non-deliverable-derivative-ndd-market\/\">Continue reading <span class=\"screen-reader-text\">Non-Deliverable Derivative (NDD) Market<\/span><\/a><\/p>\n","protected":false},"author":10393,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,3127,12039],"tags":[11872],"class_list":["post-359909","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-economy","category-knolls","tag-9pm-daily-factly","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/359909","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10393"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=359909"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/359909\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=359909"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=359909"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=359909"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}