As currency ETF's proliferate and become more popular with investors, trading liquidity continues to improve. As more business is conducted on an international basis, currency hedges and bets provide investment and trading opportunities. Some exchange traded funds are leveraged, and others are inverse funds that move in the opposite direction of the currency.
Generally there is less leverage involved when you trade currency ETFs versus trading currency futures contracts or Forex baskets. Since the amount of your investment subject to potential loss is finite, ETFs may therefore be suitable for investors who prefer less risk.
Euro ETFs
FXE - Euro ETF
FXE is the Rydex CurrencyShares Euro Trust and it trades on the New York Stock Exchange. When the value of the euro rises, the FXE rises. Options are also available on the FXE for those seeking additional leverage.
ULE - Euro ETF, Levered
ULE is the symbol for the Ultra Euro ETF by ProShares. This leveraged euro ETF is leveraged to return 200% of the price movement in the Euro/USD exchange rate.
EUO - Euro Inverse ETF, Levered
EUO is the UltraShort Euro ProShares ETF. This inverse ETF appreciates in value when the Euro weakens versus the US dollar, and the fund falls in price when the euro strengthens. This leveraged euro ETF is designed to return 200% of the price movement in the underlying Euro/USD exchange rate.
Korean Won ETFs
CEW - Emerging Currency Fund
WisdomTree Dreyfus Emerging Currency Fund is not a pure play on the won, but it does include exposure to the Korean won among the 10 other emerging market currencies it invests in: the Taiwanese dollar, Indian rupee, Israeli shekel, Turkish new lira, Chinese yuan, Mexican peso, Brazilian real, Chilean peso, South African rand, and Polish zloty.
US Dollar ETFs
A large number of ETFs are denominated in USD.
Japanese Yen
FXY - Yen ETF
While most markets lost ground in 2008, the Yen Shares returned 20 percent. It is said that Toyota's operating profits are reduced by around $400 million per year for each yen gained versus the dollar.
Chinese Yuan
CYB Yuan ETF
The WisdomTree Dreyfus Chinese Yuan Fund reflects the change in value of the Chinese Yuan (RMB) against the U.S. dollar (USD).
CNY - Renminbi ETN
Market Vectors Renminbi ETN is technically an exchange-traded note. More information about this Chinese yuan investment is available at etfcny.com.
