The world may not be engaged in a currency war yet, but it is engaged in a growth war.

With domestic demand in most home countries anemic to moderate, the universal objective is growth by exports.

Unfortunately, countries doing battle in the growth-by-exports wars end up skirmishing in the foreign exchange markets. That’s because every country that wants to export its goods and services wants them to be relatively cheap compared to its global competitors.

Driving down your home currency relative to the currencies of the buyers of your products is a way of implementing a “cover all bases” export growth strategy.

Of course, as countries trade blows in this “beggar thy neighbor” strategy, besides the danger of a debilitating currency war breaking out, rough and tumble currency manipulation leads to disruptive volatility in stocks, commodities, and bonds.

But while you personally can’t do anything about currency battles or a full-blown currency war, it doesn’t mean you can’t profit from all the volatility.

Here are some simple ways to hedge your portfolio and have fun trading the markets to profit from bickering neighbors throwing currency Molotov cocktails at each other.

In a Currency War, All Is Not What It Seems

First, you’ve got to take a hard look at the stocks you own. If you have big U.S. multinationals that garner a lot of revenues from overseas, watch out.

Companies like McDonalds (NYSE: MCD) or IBM (NYSE: IBM) that generate a lot of their earnings from overseas operations and sales are paid in local currencies wherever they do business. When it comes time to translate their overseas earnings into U.S. dollars, because that’s the language we speak here in America, companies have two options.

In this case, you’d better know which option they use.

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