Asian currency ETFs

Asian currency ETFs are one option to invest into Asia. These currency ETF shares offer another way to buy Asian currencies without the need to trade directly on Forex markets.

Asian currencies are not easily available to trade. So using Asian currency ETF shares makes them much more accessible.

What are reasons to use Asian currency ETFs?

Asian currencies are a popular global macro investment idea today (2011). Asia is region which enjoys nice growth in times when economies of developed markets are under pressure. Global macro research I use personally identifies them as a good source of profit based on future appreciation of these currencies.

As I mentioned above, it is also hard to buy them on currency markets. Their liquidity is not huge and most of them are not freely tradable. A lot of countries in Asia manage their currencies and do not allow free floating of their exchange rate. Some of them are fixed to the USD.

Asian currency ETF list

There is not an Asian multicurrency ETF available. You can select broad-based multi currency ETF CEW, but this fund contains also currencies from latin America nd Europe.

There are also some individual Forex ETFs for emerging markets available.

Chinese Renmimbi currencyshares ETFs:

CNY – Market Vectors Chinese Renminbi / USD
CYB – WisdomTree Dreyfus Chinese Yuan

Indian Rupee currencyshares ETFs

INR – Market Vectors Indian Rupee / USD ETN
ICN – WisdomTree Dreyfus Indian Rupee ETF

Another good point is that they have set high interest rates. It means positive carry addition to holding of such currency compare to developed market currency these days (2011).

Risk with these currency funds

There is also risk associated with these Forex ETFs . As I mentioned these countries heavily manage exchange rates of their currencies. Even though my Global macro opinion is that they need to revalue them, the opposite could happen.

It is possible that local governments will act under some stress and they will decide to devalue their currencies against the USD. Such action could produce losses in any position based on emerging Forex market ETFs.

So it is prudent to use good risk management rules in a trading plan for your ETF portfolio. Technical analysis of stock charts should also have its role in this decision making process.