Foreign exchange controls are restrictions applied by some governments to ban or limit the sale or purchase of foreign currencies by nationals and/or the sale or purchase of the local currency by foreigners. Foreign exchange controls are mostly used by governments who fear that free convertibility could lead to unwanted currency volatility. Foreign exchange controls often pose serious challenges to companies with international operations, either by hindering cash transactions or by making it difficult to use financial instruments such as currency forward contracts to hedge FX risk.