And then there’s the basket approach, with a an ETF such as the PowerShares DB G10 Currency Harvest (NYSEArca: DBV) which tracks currencies of the 10 developed countries that make up the G10. The fund uses the three-month interest rates of the G10 currencies and goes long on (makes a bet for) the three with the highest rates, and shorts (makes a bet against) the three with the lowest. It rebalances each quarter. Year-to-date, the fund is flat, and it returned more than 20 % in 2009.
Another option is the WisdomTree Emerging Currency Fund (NYSEArca: CEW), which tracks emerging market currencies, including the Brazilian real, Mexican peso, South African rand, Polish zloty and more. [Our Guide to Currency ETFs.]
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Tisha Guerrero contributed to this article.