Search Results

You are looking at 1 - 3 of 3 items for :

  • "MYR NDF trading" x
Clear All
Jochen M. Schmittmann
Non-deliverable forward (NDF) markets in many Asian emerging market currencies are large, rapidly growing, and often exceed onshore markets in transaction volume. NDFs tend to price significant depreciation during market stress episodes including COVID-19. Spillovers from NDFs to onshore markets are a policymaker concern. Our analysis shows that influences tend to run both ways after controlling for differences in timezones between markets. For the COVID-19 pandemic there is some evidence of NDFs leading onshore markets for a few currencies. Policy approaches to NDFs vary widely across Asia from close integration with onshore markets to severe restrictions on NDF trading.
Jochen M. Schmittmann

-directional influence from NDF to onshore for the Indonesia rupiah and the Indian rupee. Policymakers’ approaches to NDF markets in Asia vary. Korea embraced NDFs by allowing domestic financial institutions to participate. As a result, the KRW NDF and onshore markets are closely integrated. In contrast, Malaysia enforced regulation to limit MYR NDF trading and took measures to deepen onshore FX markets. China is following yet another path with the offshore deliverable CNH market. Indonesia introduced a domestic local currency settled NDF. Different policy approaches reflect country