NDF refers to non-delivery forward foreign exchange. It is a forward foreign exchange trading model and a derivative financial instrument, which is used for offshore currency trading in countries and regions where foreign exchange control is implemented. At the time of transaction, both parties to the transaction determine the face value, forward exchange rate and maturity date of the transaction. Two days before the expiration date, determine the spot exchange rate of the currency. On the maturity date, both parties to the transaction calculate the profit and loss according to the difference between the spot exchange rate and the forward exchange rate determined at the beginning of the transaction, and the losing party delivers it to the beneficiary in convertible currencies such as US dollars.

The practice is that the buyer and the seller do not need to pay the fund voucher or deposit when signing the sales contract, nor do they need to pay the principal when the contract expires, but only need to settle the difference between the exchange rate agreed by both parties and the spot exchange rate at the expiration.

The operation logic of NDO (non-deliverable forward foreign exchange option) is the same as NDF, but it extends from the concept of forward foreign exchange to option trading.

RMB NDF market is a forward market between banks and customers outside China. Its main purpose is to help customers with RMB expenditure or RMB income hedge their risks in the future. But when it expires, it is only the difference, not the real delivery. The settlement currency is USD. Due to China's capital account control, only a few hedge funds can directly speculate in RMB in China.

The characteristic of hedge funds is that they come quickly and go quickly. There is a price for entering China for speculation and policy. Therefore, the vast majority of domestic speculative RMB appreciation is not hedge funds, but overseas Chinese. The influence of hedge funds on RMB in China should be indirect, not direct.