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This post is part of a regular series written by ETF Trends editor Tom Lydon, special for CNBC.com.
Having a weak dollar isn’t necessarily a bad thing for the U.S. Although it might negatively impact the performance of certain exchange traded funds (ETFs), there are many items that could go in the positive column for this situation as well:
- American goods are cheaper for others, so they’ll buy more
- U.S. tourism will reap the rewards — with a weak dollar, foreigners will find it appealing to come over here and go on some shopping sprees; this also could help make up for the ongoing weakness in U.S. consumer spending
- If you’re holding ETFs for commodities prices in U.S. dollars (think crude oil ), you could find yourself on the winning side of the equation
- Since currencies are always about relationships, a weak dollar means that there are currencies out there that are strengthening
One of the most straightforward ways to play a weaker dollar is the PowerShares DB U.S. Dollar Bearish, which is based on the U.S. dollar index and is designed to rise as the dollar falls. But a weakening dollar opens the door for hedging with a number of other funds that track the performance of foreign currencies, including:
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