Frontier Market ETFs Can’t Handle U.S. Dollar Volatility
Wednesday, November 18th, 2009
Gary Gordon submits:
Since the U.S. dollar is experiencing an intermediate-term downtrend, one that may certainly last another 6-9 months, one is likely to profit from emerging market ETF exposure. In particular, country ETFs like Brazil (EWZ) and Russia (RSX) have benefited enormously from strength in their respective currencies — the “real” and the “ruble.”
To continue industrializing, growing and exporting, however, these relative newcomers on the world economic scene cannot afford to see their currencies climb unabated. With so much riding on their exports, Brazil and Russia require some leveling off on the “real” and the “ruble.” Otherwise, fewer countries will be able to afford to import the goods and resources.
