The PowerShares DB US Dollar Index Bullish (NYSEArca: UUP) has temporarily halted the creation of new shares for the second time in two months, as investor demand for the fund continues to surge.

UUP offers investors the opportunity to place a bullish bet on the value of the U.S. dollar against a basket of six major developed-market currencies, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc.

PowerShares is halting creations for a simple reason: popularity. The fund is only authorized by the Securities and Exchange Commission to offer a certain number of shares to investors, and it has reached that limit. PowerShares has filed for the right to offer an additional 240 million shares, which at the prevailing price of $23.01/share, translates into an additional $5.5 billion in potential assets. That request should be approved, but it may take the SEC some time to process.

If it all sounds like deja vu, that’s because the same thing happened in early November. At that time, PowerShares was forced to halt creations for more than one week after it ran out of shares to offer. The SEC eventually gave the company the OK to print an additional 100 million shares, but PowerShares used up all those shares in the past six weeks.

Why Is The Fund So Popular?

The fund has become popular among investors concerned about a snapback rally in the dollar and a reversal of the so-called dollar carry trade.

The dollar carry trade involves borrowing dollars and using that money to buy assets earning a higher return. An investor might borrow U.S. dollars and use that money to buy Australian dollars, euros, gold, oil, bonds or stocks.

The Fed’s aggressive interest rate policy has made it easy to borrow dollars at virtually 0 percent interest, making this trade extraordinarily profitable and extraordinarily popular. Many attribute the long-term weakness of the U.S. dollar against other currencies like the euro directly to this trade.

But recently, this trade has started to unwind. The dollar is broadly higher against major currencies over the past two weeks, and many expect that to happen. Some experts say that there is an opportunity for a swift rise in the greenback, as so many investors remain effectively short the dollar due to carry trade positions. The dollar carry trade has been called “the most crowded trade ever,” so the unwinding could be fierce.

Investors buying into UUP today should be careful. With new creations halted, there is a risk that the fund will trade at a premium to its true net asset value. If that happens, investors who buy into the fund will overpay for its assets. That premium will deflate when the SEC grants approval for new shares and UUP reopens for business.