You can do this by putting an encoding declaration in the XML
declaration at the start of the file. For example, if the document
is in ISO Latin 1, officially named ISO-8859-1, you can use
<?xml version="1.0" encoding="ISO-8859-1"?>
Without an encoding declaration (or a mime type if the document comes
from an http server) a conforming parser will treat it as UTF-8, and
any character above 127 will be misinterpreted.
Of course, any particular parser may not support the character set you
happen to be using.
-- Richard