In a recent article titled "How to Win From a Rising Dollar in 2012," Fool analyst Dan Caplinger offered investors a variety of ways to profit from an increase in the strength of the U.S. dollar. Some of his best advice was to consider buying shares in the inverse-leveraged ETF ProShares UltraShort Euro
Although I agree with Dan, I also think there's another side to this story -- and on this side, the U.S. dollar is falling in value. As I write, in fact, Treasury Secretary Timothy Geithner is in Beijing trying to ensure that this happens, as we've long suspected China of artificially depreciating the value of the yuan to fuel its export-led economic growth.
So is the dollar rising or falling? The answer is, it depends on which currency you're comparing it to. As you can see in the table below, illustrating the cost of a U.S. dollar in six different foreign currencies, the dollar is rising against some and falling against others. And while the reasons for these differences are beyond the scope of this article, I believe it's safe to say that these trends are likely to continue.
Exchange Rate as of January 2008
Exchange Rate as of December 2011
Rising/(Falling) U.S. Dollar
Source: Federal Reserve Bank of St. Louis. Currencies measured in units per U.S. dollar.
As an investor, you can exploit these trends in one of two ways. On the one hand, you can use the U.S. dollar's current strength against the euro to pick up European stocks inexpensively, like the National Bank of Greece
Or you can bet on a continued appreciation of the Chinese yuan by investing in companies like Baidu
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Foolish contributor John Maxfield does not have a financial position in any of the companies mentioned above. Motley Fool newsletter services have recommended buying shares of Baidu and Google. The Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.