Are currency exchange traded funds (ETFs) a good hedge on a weakening dollar? What will be the outcome of Iran selling oil in euros? These are a few concerns on investor’s minds at the moment, and Roger Nusbaum for Seeking Alpha says he feels the dollar is on a long, slow road to being globally less important than it is now, or has been in the past.

Although the dollar is the world’s reserve currency, the strengthening of the euro and yuan could mean that the three currencies share that special spotlight.  Currently much of the global commerce depends on the dollar, but this could change as commodities become available in other currencies.  If this were to happen, it could mean less demand for the dollar.  This is an example of how markets and investing evolve over time.

Rydex offers investors the opportunity to easily buy and sell currencies with the CurrencyShare ETFs.  In a press release last week, Rydex announced assets in CurrencyShares Euro Trust (FXE) surpassed the $1 billion milestone.  The ETF tracks the price of the euro and was launched in December 2005.  Tim Meyer of Rydex says the current economic climate and decline of the U.S. dollar has given investors a reason to look at currency as an asset class.

Read the disclosure, as Tom Lydon is a board member for Rydex Funds.

Tags: Currency ETFs