At 9.2% year-over-year, U.S. producer price inflation in June spiked to the worst in 27 years. Prospects for American businesses, stocks and fixed-income investments remain suspect.

In this climate, the best-performing currency funds in the second quarter were those betting on currencies that performed relatively well versus the greenback.

The best-performing currency fund from March 31 to June 30 is the

CurrencyShares Australian Dollar Trust

(FXA) - Get Report

. The fund is designed to measure the amount of U.S. dollars needed to buy an Australian dollar. So, as the U.S. dollar declines in value, it takes more and more of our dollars to buy the Aussie variety.

The spot value weakened by 4.75% in the second quarter, sending the fund up by 6.71%.

The second-place currency fund is the

CurrencyShares Mexican Peso Trust


. As pesos per dollar shrank 3.13% for the period, this fund gained 5.18% on dollar weakness against the Mexican peso.

Both of the above funds are direct plays on specific currencies. If the U.S. dollar strengthens against these two foreign currencies, then these funds are designed to lose money. On the other hand, this next fund tracks an index attempting to determine which currencies are set to appreciate.

The third-place fund,

PowerShares DB G10 Currency Harvest Fund

(DBV) - Get Report

improved by 5.10% in the second quarter, tracking the Deutsche Bank G10 Currency Future Harvest Index.

The theory behind the index is that currencies of countries with relatively high interest rates tend to rise while those of relatively low interest rates tend to fall. Futures contracts are bought for bullish currencies and sold short for currencies expected to weaken.

Currently the fund's bullish, long position is allocated to one-third each of Australian dollars, New Zealand dollars and Norwegian krones. Plus, the bearish, short position is split to one-third each among U.S. dollars, Japanese yen and Swiss francs.

The four other currencies that can be, but are not currently being, traded include the euro, Canadian dollar, British pound and Swedish krona.

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Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.