Still Waiting For Those Currency ETNs

By Murray Coleman

Among the 450-odd filings still gathering dust, one exchange-traded note sticks out as an idea whose time had definitely come.

At the top of our latest list of exchange-traded funds with prospectuses filed at the SEC is Barclays Bank's Asian & Gulf Currency Revaluation ETN.

The 19 currency ETNs now out focus mainly on big, major developed international markets. But consider that since the beginning of 2008, Asian currencies ranging from the Singapore dollar to the Malaysian ringgit and Thai baht have shown as much strength, and in fact in some cases, more strength, against the U.S. dollar than key European currencies.

Also consider this from a recent Moody's report:

Despite the Bank of Thailand's steady dose of interest rate cuts since the end of 2006, along with a military coup and various capital controls put in place specifically to weaken the baht, the Thai unit still managed to gain around 20% against the U.S. dollar in the last two years.

Still, such turmoil has led to a dampening in the baht's performance of late. But new government leaders are reportedly making renewed efforts to pump life into local consumption and increased major importing activity to take advantage of the strong currency situation.

As a result, Moody's economists are predicting the baht's outperformance to slow this year from its recent run. But they remain optimistic about its future.

Along with Vietnam and the Philippines, the firm's analysts are projecting these five ASEAN markets to slow somewhat from hyper-growth periods the past several years to more sustainable levels. The lone exception is Thailand, where GDP growth is forecasted to keep rising briskly.

What that means is while a slowdown in the U.S. will likely impact ASEAN exporting activity, Moody's sees revitalized domestic markets in each country and still strong investment activity in the region as a whole as decoupling forces.