Montreal, Canada

Buy surplus currencies and sell deficit currencies. That's the long-term trend now underway as global economic power continues to shift from West to East since 2008.

A major divergence has begun in some emerging markets as central banks in several countries raise interest rates while the Federal Reserve stands pat. And, as rates rise in these fast-growing countries, the dollar probably stands to lose unless a "flight to safety" trade remerges amid a renewed market plunge. But, over time, emerging market currencies are likely to continue appreciating vis-à-vis the dollar and the EUR.

A few years ago, The Sovereign Society, in conjunction with Everbank, launched the TSI Asian Currency Portfolio, backed by FDIC deposit insurance and diversified across major regional currencies.

Our reasoning back then was that Asia's major currencies would appreciate against the dollar over a period of time because of their compelling growth rates, accumulated surpluses and undervaluation versus the dollar. These secular trends are powering ahead this year as more central banks tighten monetary policy while the Fed keeps rates unchanged.

As the West struggles with growing austerity measures to combat huge fiscal deficits, Asian economies (ex. Japan) are growing strongly and their currencies are appreciating.

Yesterday, Thailand's central bank hiked interest rates while since early July, four other emerging market central banks have tightened; these include Peru, India, South Korea and Malaysia.

In June, China decided to loosen its trading band on the renminbi, triggering appreciation of its currency and compelling other regional banks to raise rates as inflationary pressures rise in Asia.

An interesting dichotomy has emerged for currency investors in mid-2010 as the West struggles with low growth and prolonged easy money amid softening inflation or accelerated disinflation. This contrasts starkly with Asia, whereby strong growth is being accompanied by rising inflation and increasingly, hawkish central banks tightening policy.

Based on economic growth trends, interest rate differentials and trade surpluses, emerging market currencies deserve to be upgraded. And it's a secular long-term shift that will last years, if not decades – only interrupted by systemic crises – which should serve as buying opportunities for dollar and EUR-based investors.