Hedging is the process of avoiding or minimizing risk by offsetting an investment with another. A hedger is somebody who puts these practices into action. In international situations, multinational corporations are most likely the ones to engage in this type of behavior. The way this is done is by holding on to forward contracts in order to guard the home currency value of international currency assets and liabilities. There are many benefits of hedging. For example, if an individual is able to forecast exchange rates better than the normal population, he or she will benefit greatly. If the future spot rate is lower than the forward rate given that the firm or individual has a foreign cash income, this would be a great hedging opportunity. Likewise, if the future spot rate is above the forward rate, given a cash outflow, this is also a great hedging opportunity.  In order to hedge accurately, it is necessary to first create a method to go by. If a proper procedure is not first constructed, this could result in costly consequences. To develop a method, it is first important to understand the goals and exposures at hand. Objectives and ideas for solving conflicts should also be discussed, but it is essential to keep in mind that shareholder value must be the number one goal of the firm. Limitations and restraints must be evaluated as well. It is also important to discuss these goals with all others involved. When all of these factors are fully thought through, a proper hedging strategy can be formulated in order to make the most out of investment opportunities.   Just as there are benefits of hedging, there are also costs. For example, if devaluation is likely to occur, than there is really no point in hedging. This is because the expense of hedging rises in order to meet the expected devaluation.