Ross Naylor +48 (22) 389 65 70 (w) +48 512 275 706 (m)

ul. Królewska 27 lok 411 Warszawa 00-060 Poland

Dissing the Dollar

I have read frequently of late about the inexorable decline of the US Dollar. However, I don't believe that these reports tell the full story. Yes, the decline of the Dollar against the Chinese Yuan will be a long term trend. The same probably applies for the Dollar against a range of currencies from other rising Asian countries, maybe even one or two in Latin America. You could also say that the US Dollar has been in a long term downward trend against gold. However, my base currency is not the Chinese Yuan, it is the Pound and the Dollar is not in a long term downwards trend against the Pound. Nor is this true for the Dollar versus the Euro. In both cases, these currencies face powerful headwinds

At Last

There is now a Polish Zloty exchange traded fund (etf) covering the Polish stock market. I have bemoaned the lack of a PLN version of this type of fund in the past. Sure, there were USD versions but I didn't really see the point in those. Now we have a local currency version that tracks the performance of the WIG20 (the

of their own. This is an important distinction to make. I hear of investors forgoing investment opportuni ties because these opportunities are Dollar denominated and they too have read about "the long term decline of the Dollar". In my view this is a red herring. If your base currency is the Pound or Euro then you should not pass up great investments on the basis of something that is not actually relevant to you.

More Currency Thoughts

12 months ago the rate for EUR vs the USD broke below 1.2. At the time we were in the middle of a full blown Eurozone crisis and all the talk was of

the rate reaching parity. Then all of a sudden it turns on a dime (pardon the pun) and goes all the way up to 1.48. Today it is hovering around 1.4. This change in direction raises 2 thoughts. 1. The issues that caused the crisis in the Eurozone 12 months ago have not disappeared. They are worse. The Euro will ultimately weaken as a result of this. If you are holding a large amount of Euros, it would be worth thinking of diversifying into other currencies in order to take advantage of this. 2. If you are a Euro investor, this presents a super opportunity to pick up USD denominated assets without having to worry so much about the currency risk. It is still a fact that a lot of the world's great funds are USD denominated. Often, we shy away from them

20 major and most liquid companies on the Warsaw Stock Exchange). The key features of this etf are as follows: * Provided by Lyxor Asset Management (A fully owned subsidiary of Societe Generale). * Simple - Access to 20 leading Polish companies through one securi ty. * Launched - October 2010. * Liquid - Trades like a regular share. * Low Cost - Total Expense Ratio of 0.45%.

Did You Know?

In the 250 years from 1800, the world population will grow at least 8 fold (maybe 11 fold).

because of the forex risk. However, the highest the EUR has ever been against the USD is 1.59 (March 2008). Therefore when buying USD at today's rate, there is much less to be concerned about than if you were buying them at the rate of 12 months ago.

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And finally, thanks for taking the time out of your day to read my thoughts. I am well aware that time is precious and that there are many competing demands for it. As always, if you have any thoughts or feedback on any of these articles or my ezine in general (be they positive or negative) feel free to drop me a line or leave a comment on my Facebook page. Ross.

Ask yourself what impact this increase is having/will have on your investments.

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Disclaimer

The views expressed here are my

own. They are not necessarily

shared by AES International. They

are subject to change at any time

based on market and other

conditions. This is not an offer or solicitation for

the purchase or sale of any security

and should not be construed as

such. References to specific

securities are for illustrative or

informational purposes only and

are not intended to be, and should

not be interpreted as,

recommendations to purchase or

sell such securities.

Call me: +48 (22) 389 65 70 (w) +48 512 275 706 (m)