The dollar weakens again as debasement concerns outweigh support from Bessent

The dollar weakened, interrupting Wednesday’s rebound, as the return of the so-called debasement trade outweighed assurances from U.S. Treasury Secretary Scott Bessent about a strong-dollar policy. Bloomberg’s dollar index fell by 0.3%, while precious metals such as gold and silver continued their record rallies. The dollar has for some time not behaved like a safe-haven currency, as investors have instead favored “tangible” havens such as precious metals, DoubleLine Capital CEO Jeffrey Gundlach said in an interview with CNBC.

Bessent offered support to the weakening dollar on Wednesday, saying that “the U.S. always has a strong dollar policy.” His comments came after President Donald Trump triggered a selloff in the currency a day earlier by saying he was comfortable with a weaker dollar because it benefits U.S. business.

“Bessent is using a degree of strategic ambiguity in his comments on the dollar,” said Damien Lo, chief investment officer at Ericsenz Capital. “A full-blown weak-dollar policy, as Trump initially advocated, could take on a life of its own and spiral out of control, so he is trying to temper that, although I still think the objective is a gradual weakening of the dollar.”

The dollar’s decline over the past year has become known as the debasement trade — a bet on a long-term erosion of the currency’s purchasing power due to concerns over unpredictable policy, unsustainably large budget deficits, and growing U.S. isolation. Bloomberg’s dollar index has fallen more than 2% since the start of the year, after dropping 8.1% in 2025.

The Australian dollar led gains among G-10 currencies against the U.S. dollar on Thursday, rising 0.6% and heading toward its longest streak of daily advances in more than a decade. The New Zealand dollar gained 0.5%, while the Swiss franc rose 0.3%.

Sentiment toward commodities and commodity-linked currencies was also supported by reports that Chinese property developers stopped regularly filing reports under the so-called “three red lines” as early as 2023. According to sources, authorities have eased the strict leverage metrics that deepened the property market crisis.

U.S. Treasury yields rose across the curve, led by the long end. The yield on 30-year Treasuries increased by three basis points to 4.89%.

“The U.S. always has a strong dollar policy,” Bessent reiterated, adding that this means building the right economic fundamentals.

“Overall, we believe a weaker-dollar policy would likely do more harm than good,” said Rodrigo Catril, currency strategist at National Australia Bank Ltd. “The U.S. relies on the willingness of foreign investors to finance its fiscal deficit, and while exporters may benefit from a weaker dollar, most are not that price-sensitive. Stability in the U.S. Treasury market is clearly more important.”