The dollar and its related exchange traded funds (ETFs) just can’t get a break and continue to lose ground to counterpart currencies. This doesn’t mean that investors need to sit idly by – there are opportunities when a currency is weak.

Most recently, policy makers have boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, report Ye Xie and Anchalee Worrachate of Bloomberg.  The currencies of choice are the euro and yen, which account for nearly 63% of new cash. Read more about using currency in your portfolio here.

The world is flush with dollars as the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors.  This, in turn, is making the dollar less of a diversifier for investors. To add to the currency’s woes, foreign corporations and economies are starting to feel the effects of a weak dollar, as well.

From an investor’s perspective, one can play the PowerShares DB Dollar Bearish (NYSE:UDN) which is up 7.6% year-to-date.

For a more optimistic approach, one can play the Euro through the Rydex CurrencyShares Euro Trust (FXE) which is up 6% year-to-date.

As for the yen, it can be played through Rydex CurrencyShares Japanese Yen Trust (FXY) which is up 0.4% year-to-date.

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