U.S. Treasury Secretary Defends Strong Dollar Policy

U.S. Treasury Secretary Scott Bessent said on Wednesday that the country maintains a strong-dollar policy, supporting the U.S. currency a day after comments by President Donald Trump triggered a sharp drop in the dollar.

“The U.S. always has a strong-dollar policy,” Bessent said in an interview with CNBC. However, he added that a strong dollar reflects sound economic fundamentals. “If we pursue solid policies, capital will flow toward us,” he said.

Bessent also emphasized that the U.S. is categorically not intervening in currency markets to sell dollars against the Japanese yen. Asked whether such a move was possible, he replied that U.S. authorities do not comment on such scenarios beyond reaffirming their commitment to a strong-dollar policy.

His remarks led to a broad rebound in the dollar on Wednesday after the currency fell 1.1% the previous day — its steepest one-day decline since the market turmoil in April last year. At that time, President Trump said he was comfortable with a weaker dollar and even described it as a positive development.

According to Sonja Marten, head of currencies and monetary policy at DZ Bank, Bessent is attempting to calm market tensions. She noted that while the U.S. can tolerate a weaker dollar overall, a rapid depreciation of the currency is not in its interest.

Bloomberg strategists commented that Bessent’s measured tone following the dollar’s historic drop appears aimed at stabilizing markets, but is unlikely to durably alter the U.S. currency’s downward trend.

Meanwhile, speculation that the U.S. could join Japan in selling dollars against the yen intensified late last week. This followed so-called “rate checks” by the Federal Reserve Bank of New York, which acts as an agent for the Treasury Department.

The Japanese yen has continued to weaken since October and earlier this month approached its lowest levels against the dollar since 1986. The decline has come amid investor concerns over Prime Minister Sanae Takaichi’s plans for large-scale fiscal stimulus despite the country’s high level of public debt.

Japanese authorities have repeatedly warned that they are prepared to respond to sharp currency moves. Finance Minister Satsuki Katayama said the country will continue to take appropriate measures and will coordinate with the U.S. if necessary.

According to Pat Lock, a currency strategist at JPMorgan, Bessent’s comments on non-intervention do not rule out either verbal pressure or actual intervention in the future. He noted that Bessent once again emphasized the long-term role of economic fundamentals in determining exchange rates — for both the U.S. and Japan.

Bessent added that a narrowing of the U.S. trade deficit should, over time, support the dollar. Economists, however, caution that such processes do not always translate directly into currency movements. China is cited as an example, having recorded a record trade surplus last year while the yuan nevertheless depreciated against most major currencies.

“With President Trump, with the major legislative package, and with our regulatory policy, we are making the U.S. the best place for investment and business — with clarity on taxes, regulation, and energy,” Bessent said.