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Nondeliverable forwards: can we tell where the renminbi is headed?

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Author Info

  • Patrick Higgins
  • Owen F. Humpage

Abstract

Since the early 1990s, international banks have been offering nondeliverable forward (NDF) contracts to clients who need to hedge exposures in currencies of emerging-market economies. Many also use the exchange rate on these contracts as a best guess of where the emerging-market currency is headed. The exchange rates on NDFs, however, likely embody a substantial risk premium that interferes with forecasting accuracy.

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Bibliographic Info

Article provided by Federal Reserve Bank of Cleveland in its journal Economic Commentary.

Volume (Year): (2005)
Issue (Month): Sep ()
Pages:

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Handle: RePEc:fip:fedcec:y:2005:i:sep1

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Related research

Keywords: Foreign exchange rates - China;

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Cited by:
  1. Behera, Harendra, 2010. "Onshore and offshore market for Indian Rupee: recent evidence on volatility and shock spillover," MPRA Paper 22247, University Library of Munich, Germany.
  2. Sangita Misra & Harendra Behera, 2007. "Non Deliverable Foreign Exchange Forward Market: An Overview," Working Papers id:1259, eSocialSciences.

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