One of the side effects of a weaker dollar is that the returns for foreign investors who invest in US assets are diminished. While the value of the asset may rise in dollar terms, if the dollar is losing value, the investor takes a hit when they convert their funds back into their domestic currency. For example, while the S&P 500 has risen 20.2% so far this year in US dollars, investors outside of the US have generally seen much less impressive returns.

In the table below, we looked at the YTD returns of the S&P 500 for investors in various currencies. Of the currencies we looked at, the only one that has seen a benefit from the currency translation is the Argentinean Peso. Returns have been diminished once fluctuations are taken into account for all other currencies. And of course some countries have been affected more than others. So far this year, Brazilian investors who bought the S&P 500 at the end of last year have lost nearly 12 reals for every 100 they invested on January 1st.

By Dave Nadig

It’s one thing to love a product for its innovation, but another to blanket the world with that love without highlighting the real problems.

By Ashish Advani

Despite fears plaguing the dollar and a questionable financial system in Western countries, the Indian subcontinent isn’t just soldiering on; it’s already thriving.

Currencies and the ETFs that track them are getting an increasing amount of attention these days as the U.S. dollar zigs and zags and inflation becomes a potential threat, while other currencies gain relative to it.

The Forex Market

Asian currencies appear to have lost some of their upward momentum over recent days. Although the outlook remains positive further out, they are likely to struggle to make further gains over coming weeks. One the one hand strong inflows into Asian equity markets have given support to currencies but on the other hand, data releases reveal only a gradual economic recovery is taking place, with continued pressure on the trade front as seen in the weakness in recent export data in the region. Even China has been cautious about the prospects of recovery in the country.

Almost all currencies in Asia have recouped their losses against the US dollar so far this year, with the Indonesian rupiah the star performer, having strengthened by over 11% since the start of the year. More recently the Indian rupee has taken up the mantle of best performer, strengthening sharply following the positive outcome of recent elections. The rupee has strengthened by around 3.5% since the beginning of the year and its appreciation has accelerated post elections.

Buying at lower levels during the second half of today’s trading session led the markets to recover their losses and end the day on a flat note. The BSE-Sensex ended higher by around 30 points, while the NSE-Nifty closed lower by about 5 points. Stocks from the mid-cap and small-cap spaces ended the day on a positive note, recording gains of 0.8% and 0.9% respectively. Buying activity was witnessed in stocks from the metal, consumer durables and automobile spaces, while stocks from realty and power space led the pack of losers.

Other Asian markets ended the day on a mixed note. The European indices are currently trading mixed as well. Rupee was trading at 47.1 against the US dollar at the time of writing.

India's Coming Back

As Paul Krugman recently pointed out, one of the central points they made in the latest IMF World Economic Outlook was that recessions caused by financial crises tend to get resolved on the back of export-lead booms, with countries normally emerging from the crisis with a positive trade balance of over 3 percent of GDP. The reason for this is simple: since consumers are so laden-down with debt from the boom period, they are naturally more obsessed with saving than borrowing during the initial crisis aftermath. So much then for the typical crisis, and the typical exit.

But musing on this point lead Krugman to an additional, rather disturbing, conclusion: since the present financial crisis is truly global in its reach, the habitual exit route to recovery will only work after we are able to identify another planet to send all those exports to (shades of Startreck IV). The joke may seem a rather exaggerated one, in poor taste even, but behind it there lies a little bit more than a grain of truth.

The press never misses a chance to dance on the greenback's grave these days. So the news that China's holdings of gold had almost doubled got a lot of coverage last week.

At first glance, this looks like proof that unhappiness with America's profligate ways is finally boiling over. China is preparing to dump the dollar and switch into something a little more durable. Or so the story went.

The number of exchange-traded products on Deathwatch decreased for the second month in a row. It would be premature to declare that the peak is now behind us, because I would not be surprised to see additional recession-related declines in trading activity for some ETFs in the months ahead. This month’s list contains 155 names, down from 162 last month and down from the record high of 171 for the March list. The current list consists of 114 ETFs and 41 ETNs that are at least six months old and failed to have an Average Daily Value Traded (ADVT) of at least $100,000 during April.

Elements Ben Graham Large Cap Value ETN (BVL) heads up the list this month with a pathetic 38 shares traded per day - an ADVT of just $242. Closer inspection reveals that BVL only traded on five separate days in April, and its highest-volume day was just 200 shares. The two other Elements Ben Graham products are on the list as well. The second entry on the list is Barclays GEMS Asia 8 ETN (AYT) which only traded one day last month. A grand total of 400 shares traded hands, all on April 7.

By Kindred Winecoff

Lots of talk of currency fluctuations lately. Sure, there's the U.S./ China spat over the RMB, but the controversies hardly end there:

The number of ETFs on Deathwatch continues to grow as we enter 2009. My current list contains 139 names: 97 ETFs and 42 ETNs. The list includes any ETF/ETN that is at least six months old and had an Average Daily Value Traded of less than $100,000 in December.

Exchange Trade Notes are suffering from concerns of default risk. The Lehman Brothers (LEHMQ.PK) bankruptcy, which resulted in the demise of three ETNs, is causing investors to hesitate before throwing money into these products. Unless ETN sponsors to take steps to calm investor fears, their representation on the list is likely to grow in the coming months.

These tables show the 1-week, 4-week, 13-week, 26-week and 52-week returns for a wide spectrum of asset types.

They, and other tables, are updated each Saturday morning on our site. These tables are for the week ended November 21, 2008.

Inflation is no longer the greatest threat to the short term health of the Indian economy. The global credit crunch has now taken over poll position on the list of worries which are likely to determine the evolution of policy over at the Reserve Bank of India. India's inflation continues to slow and hit a four-month low at the start of October, giving the central bank room to keep injecting cash into the financial system without fanning prices.

Wholesale prices rose 11.44 percent in the week to Oct. 4 from a year earlier after gaining 11.8 percent in the previous week, according to data from the commerce ministry last week.

India is in the middle of a storm at the moment, there can be no doubt about that. But the important point to note is that this storm is not of India's making. The financial turmoil in a number of key developed economies, and above all the United States, is sending shock waves across the global economy, and as is normal, when the earth trembles, it is the most fragile who notice it most. India's economy may be fragile in the sense that it is very vulnerable to what is colloquially known as global risk sentiment, but it is not fragile in terms of being susceptible to having its growth trajectory knocked completely off course. India may be shaken, but her economy will not be broken.

Emerging Market Bonds

In a bleak week last week, the US Dollar shone bright.  For the week and the past 52-weeks, Dollar and Yen funds are ahead.  Other currency funds, including currency strategies, are behind.

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On Thursday, September 4 Barclays Capital launched the first Exchange Traded Note [ETN] to provide investors access to a basket of eight emerging Asian currencies. The Barclays Global Emerging Market Strategy [GEMS] Asia 8 Index ETN (AYT) trades on the NYSE-Arca and includes the following eight currencies: the Indonesian rupiah, the Indian rupee, the Philippine peso, the South Korean won, the Thai baht, the Malaysian ringgit, the Taiwanese dollar and the Chinese yuan.

India's inflation remained well above the central bank's comfort level for the sixth straight month towards the end of August; increasing the likelihood, that incoming Governor Duvvuri Subbarao will continue to raise interest rates. Wholesale prices were up by an annual 12.34 percent in the week ended August 23, according to the latest data from the Indian commerce ministry said in New Delhi. That compared with a 12.4 percent gain in the previous week.

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The number of Foreign Currency ETFs and ETNs has exploded in the past year.  Our readers at AboutETFs.com have asked us repeatedly to publish an updated list of all currency ETFs and currency ETNs.  So, by popular demand, here they are as of September 1, 2008:

INDIVIDUAL CURRENCY PRODUCTS

• RydexShares ETFs: Australian Dollar (FXA), British Pound (FXB), Canadian Dollar (FXC), Euro (FXE), Japanese Yen (FXY), Mexican Peso (FXM), Swedish Krona (FXS) and Swiss Franc (FXF)
• WisdomTree ETFs: Euro (EU), Japanese Yen (JYF), Brazilian Real (BZF), Indian Rupee (ICN), New Zealand Dollar (BNZ),  US Current Income Fund (USY), Chinese Yuan Fund (CYB) and South African Rand (SZR)
• Barclays iPath ETNs:  Euro (ERO), British Pound ((GBB) and Japanese Yen (JYN)
• Elements ETNs: Australian Dollar (ADE), British Pound (EGB), Canadian Dollar (CUD), Euro (ERE) and Swiss Franc (SZE)
• Van Eck/Morgan Stanley ETNs: Chinese Renminbi-Yuan (CNY), Indian Rupee (INR), Double Long Euro (URR), Double Short Euro (DRR)

BUNDLED CURRENCY PRODUCTS

• PowerShares ETFs:  Group of 10 Carry Trade (DBV), and U.S. Dollar UP (UUP), U.S. Dollar Bearish (UDN)
• Barclays ETNs: Barclays iPath Optimized Currency Carry (ICI), Barclays GEMS Index (JEM), Barclays Asian & Gulf Currency Revaluation Note (PGD)  

According to Roger Nusbaum, in an article posted August 31, 2008 on Seeking Alpha using information from Index Universe, WisdomTree has more currency ETF offerings on the way: