Illustration: Mark Matcho
By Janice Revell
February 28, 2013

Fears of a destructive new round of currency wars are on the rise. With the global economy limping along, governments around the world are making moves to weaken their currencies in order to make their exports more competitive. The latest example is Japan, where new policies have sunk the value of the yen by 15% against the U.S. dollar over the past three months. Here’s how to protect yourself from currency fluctuations — and perhaps to profit as well.

Start with the Japanese stock market. The Nikkei 225 index has soared 25% since November on hopes that the cheaper yen will jump-start the economy. Morgan Stanley currency strategist Ian Stannard believes the yen will continue to drop against the dollar through 2014, which would bode well for Japanese stocks. The problem for U.S. investors who own Japanese shares is that a falling yen undercuts any gains when they’re converted back to dollars. As an example, the iShares MSCI Japan Index ETF, which is traded in dollars, has gained less than half as much as the Nikkei since November.

To get around this problem, you can opt for a fund designed to neutralize the impact of currency movements, such as the Wisdom-Tree Japan Hedged Equity ETF. The fund, whose returns have kept pace with the Nikkei since November, “is the Japanese equity ETF to hold when the yen is falling against the U.S. dollar,” says Morningstar ETF analyst Patricia Oey.

At the other end of the spectrum are the “losers” of currency wars: countries whose policymakers allow their currencies to go up. The euro, for instance, has risen by nearly 13% against the U.S. dollar since hitting a low in the summer of 2012. Credit Suisse global equity strategist Andrew Garthwaite believes the value of the euro will continue to hold strong against the dollar over the coming year as concerns about the demise of the European Union recede.

One way for U.S. investors to profit from a stronger euro is to own shares of U.S. multinationals that derive a large portion of their revenues from Europe; those sales are worth more when they are converted back to dollars. Among the stocks that Garthwaite sees benefitting from a stronger euro are auto parts maker Lear, online travel agency Priceline.com, and chemical manufacturer Celanese, all of which generate anywhere from 20% to 40% of their overall revenues in Europe.

Other potential victims of the currency wars include some emerging countries. The Chinese renminbi, Singapore dollar, and Russian ruble all strengthened against a weakening U.S. dollar in 2012 as the Federal Reserve continued to print vast quantities of new money. U.S. stocks that stand to benefit from the ongoing strength of emerging-markets currencies include Nike, Kraft, and Phillip Morris, says Garthwaite. Sometimes the best defense in a currency war is a shopping spree.

–A former compensation consultant, Janice Revell has been writing about personal finance since 2000.

This story is from the March 18, 2013 issue of Fortune.

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