Hi

I'm thinking about investing in a UK or European share fund while our dollar is reasonably strong but I'm having problems understanding currency hedging and whether to use it or not.
I thought currency hedging was meant to protect your investment if the dollar dropped but after reading some articles about hedging (below), I don't really get it.

For example at: http://www.peak.net.nz/index.php?page=currency
"Hedging 100% back to NZ dollars is often the preferred option for lower risk portfolios to reduce volatility. This strategy is not without risk though, as our currency could be massively devalued for example in (heaven forbid) an outbreak of foot and mouth disease. In that instance, unhedged overseas investments will protect some of the value of your KiwiSaver nest egg."

and:
http://http://martinhawes.com/recent-articles/ (article: Botulism: A timely reminder – 11 August 2013)
"Financial advisers and banks will also be able to help you buy offshore investment funds. However, you should be careful that the funds that they offer are not hedged back to the New Zealand dollar.
I have written previously about the hedging of international investments back to New Zealand dollars: currency hedging cancels out much of the reason for making international investments because you remain completely exposed to a major fall in the New Zealand dollar."

I would have thought that currency hedging would offer some sort of protection against a fall in the Kiwi dollar but the articles above suggest it doesn't.
I don't understand hedging; what are the advantages of currency hedging and when should I consider it when making overseas investments?

Thanks

Tim