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Taking a Strategic Approach to Currency Exposure

A strong dollar aside, think risk first when it comes to currency exposure.

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Note: We are re-featuring this article as part of Morningstar's May 2015 International Investing Week special report. This article was originally posted on April 26, 2015, and appeared in the April/May 2015 issue of Morningstar magazine.

The U.S. dollar looks invincible these days (Exhibit 1). For U.S. investors, its surge can make the case for hedging foreign-currency exposure seem like a one-way argument. Why own other currencies? The dollar gained 17.4% against the euro, 13.6% against the yen, and 7.4% against the pound over the past year through Feb. 23.

Kevin McDevitt does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.