Currency Hedging Strategies for Foreign Equity Exposure

You are a portfolio manager at an international investment fund that has significant exposure to European equities. Due to recent economic developments, your firm is concerned about potential adverse movements in the exchange rate between the Euro (EUR) and the US Dollar (USD). In response, you have been asked to devise a currency hedging strategy to mitigate this risk.

Discuss the various hedging strategies available to your firm. In your discussion, evaluate at least two different types of derivatives that can be used for hedging currency risk. Also, address the advantages and disadvantages of each strategy, and recommend a comprehensive hedging approach for your portfolio, justifying your recommendations based on the specific risks associated with currency exposure.