Rydex Investments has applied for permission to trade the first-ever currency ETF pegged to the price of the Euro. The Euro Currency Trust would trade under the symbol FXE if approved by the Securities and Exchange Commission.
Each share of the ETF will represent 40 Euros, and the price will be based on the Federal Reserve Bank of New York’s noon buying rate. So, if the rate is 1.25, the ETF will be priced at $50.
Although the ETF represents a cheap way to trade the Euro, it may have difficulty drawing customers, as currency traders aren’t likely to switch and lose the 50- or 100-to-1 leverage available to them in the spot forex and currency futures markets, while other traders may be leery of anything associated with the forex market.
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