Standard & Poor's has two currency indexes linked to two of the world's hottest emerging markets. The S&P Chinese Renminbi Index and the S&P Indian Rupee Index are the first members of a full family of similar indexes that S&P is launching; the S&P Currency Beta Series will include indexes both for individual currencies and groups of currencies. They were created for use as hedging and measurement tools.

David Blitzer, the managing director and chairman of the Index Committee at Standard & Poor's, says neither China nor India has "liquid and accessible" markets for currency futures.

"The launch of these two new indices will provide investors with access to the currencies of two emerging economic superpowers, China and India, while also serving as a reliable and relative benchmark for currency performance. In the S&P Chinese Renminbi Index, this represents the first instance where U.S. investors will have access to a local Chinese asset," he added.

The indexes do not represent the actual performance of the currencies but of nondeliverable forward (NDF) currency contracts that reflect the performance of the renminbi and the rupee, respectively, versus the U.S. dollar. NDF contracts are short-term, cash-settled instruments that trade over the counter; they are generally issued by big banks.

Keith Loggie, director of index research and design for S&P, says that the NDF contracts are the easiest way to access currencies like the rupee and renminbi since, because of capital controls, the spot currency markets are either difficult to enter or simply closed to foreigners.

The indexes are based on a rolling three-month investment strategy: As a three-month NDF contract hits its valuation date, it is rolled over into the next three-month forward contract. Values are calculated based on the current forward rate and the current spot rate. Excess and total return versions are available for both currencies.

The S&P Indian Rupee Index was up 18.71% for the 12 months ended February 29, 2007, but down 0.54% year-to-date. Meanwhile, the S&P Chinese Renminbi Index was up 2.10% year-to-date, but only 8.06% for the one-year period.