With the eurozone debt crisis strengthening the dollar, investors in international ETFs should be more aware of their currency exposures.

Dave and Devin wrote blogs recently about how currency movements can affect the returns of international ETFs.

While I won't go into the details again, in a nutshell, when you buy an international ETF traded on a U.S. exchange, you're basically shorting the U.S. dollar relative to the currency of the country you're exposed to. So, your returns are impacted by movements in both the underlying securities and local currency.

With the current crisis in Europe causing a rally in the U.S. dollar—again due to the resurgence in the risk-off trade—the few currency-hedged ETFs currently available are starting to look interesting.

These funds include the db-X MSCI Emerging Markets Currency-Hedged Equity Fund (NYSEArca: DBEM), db-X MSCI EAFE Currency-Hedged Equity Fund (NYSEArca: DBEF), db-X MSCI Brazil Currency-Hedged Equity Fund (NYSEArca: DBBR) and WisdomTree International Hedged Equity Fund (NYSEArca: HEDJ).

These funds are designed to outperform similar nonhedged funds when the dollar strengthens (and conversely, underperform them when the dollar weakens) by utilizing forward currency contracts to hedge their currency exposure.

It seems simple, but a major factor that's also often overlooked is the negative correlation we've been seeing between movements in the broad equity markets and dollar over the past several years.

During recent crises and sharp equity sell-offs, investors have repeatedly piled into U.S. Treasurys and the U.S. dollar as a "flight to safety" trade.

Conversely, when the risk-on trade is back in play and the broad equity markets have rallied, we've largely seen weakness in the dollar relative to most currencies, save the Japanese yen and Swiss franc, which have "safe haven" appeal themselves.

Because of this interesting trend, these funds can be viewed as more than just currency-hedged funds—they're actually performing as de facto lower-volatility versions of their nonhedged peers.

Take a look at the historical returns charts between the MSCI Emerging Markets Index—tracked by popular funds like the Vanguard MSCI Emerging Markets ETF (NYSEArca: VWO) and iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM)—and the MSCI Emerging Markets Currency-Hedged Index, which DBEM aims to track.

We'll compare the indexes, since DBEM still has a short trading history. Pay special attention to the sell-off during the 2008 financial crisis and the recent European debt crisis.

Source: Bloomberg

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