Currency hedging is a risk management technique employed to mitigate potential financial losses resulting from unfavorable fluctuations in foreign exchange rates. As an academic concept and field of study, it investigates the theoretical foundations, practical application, and empirical effectiveness of utilizing financial instruments, such as forwards, futures, options, and swaps, to stabilize the value of assets, liabilities, or future cash flows denominated in a foreign currency, assessing its impact on firm value, investment returns, and international economic activity.