ETF Asset Class: Currency
A currency ETF is an exchange-traded fund that aims to track the performance of a specific currency or basket of currencies. Currency ETFs can be used as a way to hedge against currency risk or to speculate on the movements of currency markets. Like all ETFs, currency ETFs trade on exchanges and can be bought and sold throughout the day. The value of a currency ETF is typically linked to the spot price of the underlying currency or currencies. currency ETFs are also subject to currency risk, which is the risk that the value of the underlying currency or currencies will decline relative to other currencies. For example, if you hold a currency ETF that tracks the Japanese yen, you will experience currency risk if the yen weakens against other major currencies.