A financial analyst at XYZ Corporation is assessing the impact of currency fluctuations on the company’s international operations. XYZ Corporation operates in multiple countries, generating revenues in various currencies. Due to the volatility in foreign exchange rates, the analyst is considering hedging strategies using derivatives to minimize the risk associated with currency movements.

As the analyst, describe two different hedging strategies using derivatives that XYZ Corporation can implement to mitigate currency risk. For each strategy, detail how it works, its advantages, and potential drawbacks. Additionally, discuss the circumstances under which each strategy would be appropriate to use.