use strict;
use warnings;

use XML::LibXML qw( );

my $xml = '<?xml version="1.0"?><root>&#237;</root>';

my $parser = XML::LibXML->new();
my $doc = $parser->parse_string($xml);
$doc->setEncoding('UTF-8');

open(my $fh, '>:bytes', 'xml') or die;
print($fh $doc->toString);