Wall Street posts worst week in over a month amid bond sell-off, rising oil prices
WASHINGTON, Jan 28 (Reuters) - The U.S. has a strong dollar policy and that means setting the right fundamentals, U.S. Treasury Secretary Scott Bessent said on Wednesday, while denying that Washington was intervening in currency markets to support the Japanese yen.
Asked on CNBC if the U.S. was intervening to strengthen the yen, Bessent said, "Absolutely not."
Pressed if that was something the U.S. planned to do, Bessent said, "We don’t comment other than to say we have a strong dollar policy."
Bessent’s remarks boosted the dollar’s value against a basket of currencies on Wednesday, sending it up from a four-year low touched in the prior session.
The dollar index, which measures the U.S. currency’s strength against a basket of peers, rose 0.5% to 96.391. The index sank as low as 95.86 on Tuesday, its weakest since February 2022, after U.S. President Donald Trump brushed off this month’s slide, emboldening dollar bears.
The dollar index is down nearly 2% for the year, after falling 9.4% last year.
Trump said on Tuesday the value of the dollar was "great", when asked if he thought it had declined too much. Traders took this as a signal to intensify dollar selling, ahead of a Federal Reserve policy decision later on Wednesday.
The dollar has been under pressure due to uncertainty about U.S. interest rates and tariffs, threats to the independence of the Federal Reserve and rising fiscal deficits.
Gold, a safe-haven asset that generally rises when the dollar weakens and does not yield interest, climbed on Wednesday, surpassing $5,300 per ounce for the first time.
Bessent expressed confidence that Trump’s tax and deregulation policies were making the U.S. attractive for investors, bringing in trillions of dollars.
"Over time the prices on the screen can fluctuate over six months, a year," Bessent said. "If we have sound policies the money will flow in, and we are bringing down our trade deficits so they, automatically that should lead to more dollar strength over time."
Bessent repeated his forecast that the U.S. economy would perform well this year, but said he was not worried about that growth triggering inflation.
Productivity and wage growth do not necessarily lead to higher inflation, he said, adding that declining rents could lead to drops in measured inflation in time.
