Currency ETFs try to reflect the performance of a single currency or a basket of currencies. ETF providers structure their currency funds to try to reflect the movements of a currency in a foreign exchange market by holding foreign currencies directly, foreign currency denominated short-term debt instrument, derivatives or swaps.

Additionally, commodity producing country currencies are enjoying a boost from rebounding crude oil and metals prices. For example, Russia is a large producer and exporter of oil. Brazil also has larger oil and metal reserves. South Africa is also a major gold and precious metals miner.

Related: Currency Hedged ETFs Offer a Smoother Long-Term Ride

“The UK political timeframe looks too long to vouch for an outright long U.S. dollar in an environment where funding currencies will be forced by monetary policy. Equity fundamentals are weak, for sure. But that will influence emerging market FX in a very choppy way, in bouts of risk-off. It doesn’t look like 2014-15 in terms of U.S. dollar cycle. In doubt, real money will likely buy emerging market bonds,” adds Citi in the note posted by Barron’s.

For more news and strategy on the Currency ETF market, visit our Currency category.

WisdomTree Emerging Currency Strategy Fund