Rupee volatility: Muzzle price signals if necessary but act to close onshore-vs-offshore market gaps
Can a price signal be gagged? An NDF is a derivative contract, settled in dollars, traded in financial centres such as London, Singapore, Hong Kong and Dubai. Because the rupee is not fully convertible, non-residents who wish to hedge or speculate on the rupee use NDFs instead of the onshore market. Daily NDF volumes globally are estimated to be $150 billion, making the market large, liquid and informative.
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