A foreign exchange forward contract (FEC) is an agreement between two parties to make a foreign exchange transaction, usually involving a currency pair that is not available on the foreign exchange markets.
Natural hedging is a strategy aimed at reducing risk by investing in assets whose performance is negatively correlated through some internal or natural mechanism.
Bare interest arbitrage is a form of arbitrage that involves moving from a local currency with a lower interest rate to a foreign currency offering a higher interest rate on deposits.
Uncovered interest rate parity (UIP) is a fundamental equation in economics that governs the relationship between foreign and domestic interest rates and currency exchange rates.
A collar is an options strategy that involves buying a put option down and selling a put option up, which is used to protect against large losses but also cap large profits up.
The condition of covered parity of interest rates suggests that the relationship between interest rates and the spot and forward values of the currencies of the two countries are in balance.
A peg is a policy in which a national government sets a certain fixed exchange rate for its currency against a foreign currency or a basket of currencies.