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DEFINITION of 'Currency ETF'

Exchange-traded funds (ETFs) invested in a single currency or basket of currencies. Currency ETFs aim to replicate movements in currency in the foreign exchange market by holding currencies either directly or through currency-denominated short-term debt instruments.

BREAKING DOWN 'Currency ETF'

Currency ETFs are widely used by investors who wish to gain exposure to the foreign exchange market and would prefer not to enter the futures or forex markets. With the growing popularity of ETFs, investors have found it very easy and relatively inexpensive to trade currency ETFs in order to take advantage of fluctuations between currencies. Currency ETFs can be purchased to track most international currencies including the U.S. and Canadian dollars, the Euro, British pound and Japanese yen.

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RELATED FAQS
  1. How can I invest in a foreign exchange market?

    The foreign exchange market, also called the currency market or forex (FX), is the world's largest financial market, accounting ... Read Answer >>
  2. What exactly is an ETF portfolio?

    Learn what exchange-traded funds (ETFs) are and their advantages to investors, what a portfolio of ETFs is, and discover ... Read Answer >>
  3. Besides stocks, what other asset classes can I invest in through ETFs?

    Discover the extremely far-reaching range of investment asset classes that are available to investors through exchange-traded ... Read Answer >>
  4. Do ETFs pay capital gains?

    Learn about exchange-traded funds (ETFs), which can generate capital gains for their shareholders due to occasional and substantial ... Read Answer >>
  5. What is a country ETF?

    Learn about the operational basics of exchange-traded funds (ETFs) and the foreign investment opportunities and advantages ... Read Answer >>
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