Oh, the amazing shrinking dollar.The U.S. currency tumbled last week to a record low after the Federal Reserve cut interest rates, continuing the dollar's six-year slide. Behind the latest drop is the expectation of weaker U.S. growth and stronger overseas economies. The slump took the dollar below $1.40 for each euro and put it at parity with the Canadian dollar for the first time in more than 30 years.
While U.S. tourists might think twice about a vacation abroad, investors are discovering a variety of ways to make a buck betting against the buck.
Wall Street is cranking out a multitude of new investment vehicles to make it easier for small investors to participate in global currency markets: a worldwide network of banks, hedge funds, speculators, governments and financial institutions that process about $1.8 trillion a day.
The investment products include certificates of deposit, mutual funds and exchange-traded funds packed with various currencies or linked to baskets of foreign exchange. More than $2.7 billion was invested in open-end currency funds by the end of July, up from $36 million at the end of July 2000, according to estimates by Lipper, a Reuters company.
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