My take, cross hedge.
This is my understanding and it works: 1) Proxy hedge - enter into a forward contract betw domestic currency vs a 2nd foreign currency (which is correlated with the 1st foreign currency in which the bond is denominated) 2) Cross hedge - enter into a forward contract betw 1st foreign currency vs a 3rd foreign currency (not correlated BUT assume diff risk exposure) NOw assume we cant trade in THB (1st FC) and use a proxy VND (2nd FC) (positive correlated). 1) Using proxy hedge will be enter into a forward contract betw USD vs VND (VND is used as a proxy for THB) 2) Using cross hedge will be enter into a forward contract bew THB and WON (3rd FC) (not correlated since WON will appreciate more than the USD)