lexicon

Also known as notional amount and notional principal amount, this is the theoretical value of an asset, excluding factors such as inflation, depreciation or other forms of impairment.

The notional value is the underlying amount in a derivatives trade which is used to price payments on that derivative.

Example
Counterparties in a foreign exchange swap may agree to payments relating to two notional amounts of currency, for example. While the underlying amount may function similarly to principal on a bond, the parties do not exchange this amount, making it "notional". [1]