Pricing and Valuation
An investor enters into a forward agreement to purchase a notional amount, N, of the base currency at the contracted forward rate, F, and would pay NF units of the quoted currency. On the fixing date, that investor would theoretically be able to sell the notional amount, N, of the base currency at the prevailing spot rate, S, earning NS units of the quoted currency. Therefore, the profit, on this trade in terms of the base currency, is given by:
The base currency is usually the more liquid and more frequently traded currency (for example, USD).
Read more about this topic: Non-deliverable Forward