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Stoked by a hawkish interest rate employed by India's central bank to stem inflation, the rupee enjoyed a solid performance in 2010, gaining about 5% agains the dollar, but the party may just be getting started.

Wells Fargo & Co., the best rupee forecaster in 2010, predicts the currency's appreciation will double this year as the central bank adds to last year's six interest-rate increases, according to Bloomberg News.

Wells Fargo's forecast is for 10% rupee appreciation this year. India is the second-fastest growing major economy in the world behind China, but its rate of inflation actually surpasses China's.

The good news for forex investors is that India isn't shy about raising and that puts the spotlight on the WisdomTree Dreyfus Indian Rupee ETF <span class="ticker"
                data-ticker="ICN"
                data-exchange="NYSE"
                style="display: inline-block;">ICN</span>.

ICN is a thinly traded fund to be sure, but it might just be the best way of trading rupee appreciation against the dollar. 

The fund normally invests in a combination of U.S. money market securities with forward currency contracts and currency swaps which are designed to create a position economically similar to a money market security denominated in Indian Rupee, according to its profile on Yahoo Finance.

For a more diversified approach, try the WisdomTree Dreyfus Emerging Currency ETF <span class="ticker"
                data-ticker="CEW"
                data-exchange="NYSE"
                style="display: inline-block;">CEW</span>. CEW offers exposure to many of the currencies of emerging markets that are dealing with the specter of inflation, meaning the fund could be a winner due to more interest rate hikes in a number of markets, including India.

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Rupee Ready To Rock Again In 2011: ETF Plays - WisdomTree Emerging Currency Strategy Fund (ARCA:CEW)

WisdomTree Emerging Currency Strategy Fund

WisdomTree Dreyfus Emerging Currency Fund

Rupee Ready To Rock Again In 2011: ETF Plays

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