Wish there was a BRIC currency ETF

Dollar has been in a free fall. Against, the Euro, it has depreciated by 20% over the last two years. Over the same time frame, the dollar has depreciated 20% against the Brazilian Real, 13% against the Russian Rouble, 15% against the Indian Rupee, 9% against the Chinese Yuan. In the long run, however, it’s the BRIC currencies against which the dollar will depreciate the most. Just like many currency ETFs that already exist, I wish there was a BRIC ETF that allowed us to take long positions against the BRIC currencies.

First, there are the macroeconomic fundamentals that are driving growth of these nations and thereby causing the currency to appreciate. In fact, the year of 2007 may prove to be the year of divergence where the BRIC nations take the baton for driving global growth from the developed nations.

Second, currencies of China and India are managed float. They are not free float. Which means when they would be allowed to float, it would get a quick bump to those currencies.

Finally, the sovereign funds have been big buyers of the BRIC currencies. According to Stephen Jen, chief currency economist at Morgan Stanley, the sovereign wealth funds have been an important driver of currencies in emerging markets, particularly the BRIC countries.

I hope that a BRIC currency ETF is introduced soon.