According to one of the EOC question The contribution of the currency to portfolio standard deviation decreases as investment horizon increases. Anyone wants to comment on this?
One of the four reasons currency risk is not a barrier to international investment is that currency risk decreases with the investment horizon. Exchange rates are mean reverting and so if you have a long time horizon you should be less concerned about currency risk than should a short term investor. ETA: The other three reasons are: 1) Currency can be hedged 2) Currency risk and marker risk are not additive 3) Currency risk can be diversified away