Google Webmaster Tools now supports Internationalizing Domain Names in Applications (IDNA)

http://googlewebmastercentral.blogspot.com/2007/08/written-by-trevor-foucher-webmaster.html

IDNA provides a way for site owners to have domains that go beyond the domain name system's limitations of English letters and numbers. Prior to IDNA, Internet host names could only be in the 26 letters of the English alphabet, the numbers 0-9, and the hyphen character. With IDNA support, you'll now be able to add your sites that use other character sets, and organize them easily on your Webmaster Tools Dashboard.

IDNA uses Punycode

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