Traders placing record bets on dollar collapse – Bloomberg
Traders are betting big that the US dollar will continue to fall amid uncertainty about Washington’s political and economic policies, Bloomberg has reported.
The dollar suffered its worst single-day decline in nearly a year on Tuesday, plunging to its lowest level since February 2022. The fall was part of a broader downtrend that began after US President Donald Trump launched sweeping global tariffs early last year. The resulting trade frictions, as well as expectations of Federal Reserve rate cuts and rising deficits and debt have been undermining confidence in the currency.
“US policy volatility is now debasing the dollar,” said Luis Costa, Citi’s head of emerging markets strategy. “This… is prompting a market reshuffle into dollar shorts.”
Bloomberg said options that profit from a falling dollar are now the most expensive since 2011, as traders use them as insurance against a drop. Markets are also more negative on the dollar’s long-term outlook than at any point since May 2025, the outlet noted. Rising investor anxiety is pushing up hedging costs, with short-term dollar volatility at its highest since September and demand for protection against large swings climbing, signaling traders expect further losses.
The dollar’s selloff this week came just after Trump dismissed concerns over the currency’s weakness, insisting that it’s “doing great.”
While a weaker dollar can help multinationals convert foreign profits and boost US exporters’ competitiveness, critics warn it also risks acting as a hidden tax on consumers, raising import costs, fueling inflation, harming foreign suppliers, and undermining the greenback’s global standing as a reserve currency.
US Treasury Secretary Scott Bessent on Wednesday argued that, over time, Trump’s economic policies will attract investment and help strengthen the greenback.
“The prices on the screen can fluctuate over six months, a year,” he stated. “If we have sound policies the money will flow in, and we are bringing down our trade deficits so, automatically that should lead to more dollar strength over time.”
