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Currency Exchanged Traded Notes. Exchanged Traded Notes (ETNs) are a newer investment vehicle for trading foreign currencies. Some experts tout these ETNs, which are senior unsecured debt securities, as yet another simple way to enter obscure foreign currency markets. Exchange traded notes are hybrids that offer the flexibility of currency ETFs (exchange traded funds) since the notes trade on major stock market exchanges during normal hours, while the ETNs also allow investors to hold the security until maturity like a bond if they so choose. An important difference between ETFs and ETN's is that the value of an exchange traded note is affected by the issuer's credit rating. In other words, an ETN's value can decrease regardless of whether the underlying index goes up or down, once the note issuer's credit is downgraded. Following a credit rating cut, the there is a possibility the investors may never recover the principal amount on the note, even if the index recovers and performs well.
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