Speculate on the U.S. dollar? How former U.S. Treasury Secretary Robert Rubin is doing it

Posted: March 13, 2012

If a former U.S. secretary of the Treasury is diversifying away from the American dollar, the rest of us had better pay attention.

Robert Rubin, who as U.S. Treasury secretary in the 1990s heralded a strong-dollar policy, last week announced that he has too much of his personal investments tied up in the greenback. A “disproportionate amount” of his assets are in cash and he “should be more allocated away from the dollar,” Rubin, 73, told the TradeTech conference in New York.

Rubin served in President Bill Clinton’s administration between jobs at Goldman Sachs Group Inc. and Citigroup. Interestingly, he also withdrew his support for the latest Federal Reserve quantitative easing, saying, “QE1 was a necessity, QE2 I sort of wondered about,” according to Bloomberg. “QE3 would accomplish very little. Not only would it expand the money supply, it would undermine confidence that the Fed would ultimately monetize our debt.”

If you agree with the former Treasury secretary (or even if you don’t), there are ways to trade the dollar that are fairly simple. You can also trade other currencies as well — all using exchange-traded funds, or ETFs.

One is PowerShares DB US Dollar Index Bullish Fund, which replicates being “long” (bullish) on the American dollar against the following currencies: euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc. There’s also U.S. Dollar Up (UUP) or Dollar Down (UDN), and ProShares UltraShort Euro (EUO), which allows you to “short” or bet against the euro. Also, there’s the Market Vectors Double Short Euro ETN (DRR), a fund that uses “leverage,” or borrowed funds, to double up the wager.

There are at least 30 ETFs for currencies alone, and more coming, so it is always helpful to double-check a list of these. As I have written in past columns, I like the ETF Database website (http://etfdb.com/type/currency/all/) and Bloomberg’s website (http://www.bloomberg.com/markets/etfs/currency/). The site Seeking Alpha also has a helpful guide to get started (http://seekingalpha.com/article/31129-a-guide-to-currency-etfs-and-etns). Always scrutinize fees beforehand, as ETFs can be expensive to trade.

Lots of factors can influence the value of the dollar.

Here are just two scenarios. If the Fed finally decides to raise interest rates, the dollar would likely rise. But if the government does another round of quantitative easing (QE3), then the dollar would probably fall.

Tax-time tips

Most of us want to take the EZ-form way out and get our taxes over with. But there are some key deductions good for only one more year that you can use if you itemize, says Mary Caraccioli, who hosts a financial “makeover” reality show called “We Owe What?” (http://livewellnetwork.com/We-Owe-What/8432944).

Whether to itemize deductions on your tax return depends on how much you had in certain expenses last year. If the total amount you spent on qualifying medical care, mortgage interest, taxes, charitable contributions, etc., is more than your standard deduction, you usually benefit by itemizing.

Earned-income tax credit, child-care tax credit, some education credits, and energy-tax credits for Energy Star appliances and windows won’t be deductible after this tax season, so if you have any, you should take that deduction.

A final tip: Avoid tax-refund loans. Predatory lenders usually offer them, and you’ll regret it, Caraccioli says.

IRS2Go tips

The Internal Revenue Service has released a new version of IRS2Go, a smartphone application that lets you interact with the IRS using your mobile device. If you have an Apple iPhone or iTouch, you can download the free IRS2Go app by visiting the iTunes app store. If you have an Android device, you can visit the Android Marketplace to download the free IRS2Go app.

Three new features are available, providing access to video, news updates, and more tax information.

You can request your tax return or account transcript using your smartphone. IRS2Go allows you to request this information, which will be mailed to you within several business days.

You can also check the status of your federal income tax refund using IRS2Go. Enter your Social Security number, encrypted for security purposes, then select your filing status and enter the amount of your anticipated refund from your 2011 tax return. If you e-file your return, you can check your refund status within a few days. If you file a paper return, you will need to wait three to four weeks to check your refund status because it takes longer to process paper returns.

You can also use IRS2Go to subscribe to filing-season tax updates by entering your e-mail address to automatically get daily tax tips. Tax Tips can help you with your tax-planning and preparation needs. They are issued daily during the tax-filing season and periodically during the rest of the year. The plain-English updates cover topics such as free tax help, child tax credits, the Earned Income Tax Credit, education credits, and other topics.

Erin Arvedlund is a finance reporter in Philadelphia. Contact her at 646-797-0759 or erinarvedlund@yahoo.com. Read more of her columns at www.philly.com/arvedlund.