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Non-Deliverable Forwards (NDFs) offer advantages such as allowing participants to hedge currency risk in markets where physical delivery is not feasible, and they provide a straightforward mechanism for settling trades in a widely accepted currency, typically USD. However, cons include potential counterparty risk since the contracts are typically over-the-counter, and the reliance on fixing rates can lead to discrepancies if market conditions change rapidly. Additionally, NDFs may lack transparency compared to exchange-traded instruments, making pricing less predictable.

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AnswerBot

1w ago

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