Many investors act as if they're married to the U.S. dollar. They own U.S. stocks and bonds, and they earn their wages and dividend payments all in greenbacks. But with the dollar seemingly losing value every day, scorned investors are starting to get the itch to find satisfaction from international investments.

Recent economic news has made investors jumpy. Rate cuts stabilized markets after the first wave of the credit crunch, but it came at the cost of undercutting the value of the U.S. dollar. Commodities such as oil and precious metals are at or near historic highs. The director of the International Monetary Fund believes that the dollar could fall even further. And with the stock market celebrating the 20th anniversary of the 1987 crash by dropping 350 points, investors are looking for some kind of safe haven.

Getting a yen to invest abroad
Of course, trying to time any market -- including those dealing in currency exchange rates -- is a gamble. But if you've got most or all of your investments in dollar-denominated assets, you're taking an even bigger risk. Specifically, you're risking that the purchasing power of the U.S. dollar will keep up with currencies throughout the world.

Investing in foreign stock markets can help lessen that risk. By owning shares of companies that do business in euros, yen, pounds, yuan, rupees, or any of dozens of other foreign currencies, you can protect your portfolio from adverse fluctuations in the currency markets.

Look, for instance, at some results over the past five years.

Index

Annual Return (Local Currency)

Annual Return (U.S. Dollars)

MSCI Japan

13.16%

16.25%

MSCI Pacific ex-Japan

18.76%

31.44%

MSCI Europe

12.91%

23.86%

MSCI Emerging Markets

29.25%

35.81%

Source: Morningstar.

As you can see, international markets performed quite well around the globe, with strong gains in local currency terms. But when you factor in the effect of the falling dollar, it turns good returns into explosive ones -- returns that helped preserve investors' purchasing power beyond America's borders. And below, you can see just a few of the companies that gave investors something to smile about since 2002.

Company

5-Year Annualized Return (U.S. Dollars)

Infosys (NASDAQ:INFY)

23.7%

Petroleo Brasileiro (NYSE:PBR)

83.0%

Cemex (NYSE:CX)

29.5%

BHP Billiton (NYSE:BHP)

54.6%

SAP (NYSE:SAP)

25.6%

Siemens (NYSE:SI)

28.5%

Source: Morningstar.

What goes up must come down
Of course, world stock markets won't go straight up forever. But when you start talking about currencies, the dollar's weakening trend is decades old in some cases. In 1971, you could buy 350 yen for a dollar. And although the dollar has recovered from its low of around 80 yen in 1995 to about 115 yen today, no one's looking for the dollar to move back to its 1971 levels. Similarly, after hitting a low of $1.05 in 1985, the British pound has since nearly doubled.

Granted, buying international stocks was a better bet several years ago, before the double benefit of advancing world stock markets and a falling dollar converged to produce such spectacular returns. Yet part of not timing the market is not being afraid to start an investing strategy when prices are relatively high. Even if global markets turn down in the coming weeks or months, your more diversified portfolio should benefit you over the long term.

So if you still don't have international stock exposure in your portfolio, think about moving at least a small portion of your assets abroad. If the dollar keeps falling, you'll likely be glad you did.

For more on international investing, check out:

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Fool contributor Dan Caplinger looks for as much diversification as he can get. He doesn't own shares of the companies mentioned in this article. Petroleo Brasileiro is an Income Investor recommendation. The Fool's disclosure policy works around the world.