The U.S. dollar has fallen to its lowest level since 2023. The drop followed comments from President Donald Trump about possible new tariffs and came as attention returned to the size of the federal budget deficit.
The Bloomberg Dollar Spot Index declined by as much as 0.8% on Friday. The index has now dropped by more than 7% since the start of the year. The latest decline took place after Trump spoke about potential tariffs on the European Union and Apple Inc. Those remarks were made earlier in the week and were followed by a sell-off in the currency markets.
Treasury Secretary Scott Bessent said the recent market activity did not mean the dollar should be labeled weak. He pointed to gains in other currencies as the main factor behind the shift. The New Zealand dollar and the Australian dollar both rose more than 1% against the U.S. dollar during the same period.
Speculative trading around the dollar has increased. According to the Commodity Futures Trading Commission, investors are currently holding positions worth around $16.5 billion that are tied to a falling dollar. These positions have grown over recent weeks as currency traders responded to policy signals and market conditions.
In Washington, the Senate is reviewing a tax bill backed by Trump, which he has dubbed the “Big, Beautiful Bill.” The version passed by the House of Representatives is expected to widen the federal deficit by $700 billion annually. Budget projections related to the bill have drawn market attention and added to the discussion over U.S. fiscal policy.