U.S. Treasury Secretary Scott Bessent said the United States maintains a strong dollar policy rooted in economic fundamentals and is not intervening in currency markets to support the Japanese yen. Speaking in Washington, Bessent rejected suggestions that U.S. authorities were taking direct action to influence the yen’s exchange rate, emphasizing that Washington’s approach centers on growth, investment, and trade balance adjustments rather than market operations. His comments came amid heightened volatility in currency markets and growing speculation about coordinated action following sharp moves in the yen and broader dollar weakness earlier this week.
The remarks helped stabilize the dollar, which rebounded from recent multi-year lows against a basket of major currencies. The dollar index moved higher after Bessent’s comments, reversing part of a selloff that had accelerated following remarks from President Donald Trump earlier in the week that appeared to downplay the currency’s decline. Traders had interpreted those remarks as tacit acceptance of dollar softness ahead of a Federal Reserve policy decision, fueling bearish positioning. The dollar remains under pressure year-to-date, reflecting uncertainty around interest rate policy, trade tensions, fiscal deficits, and concerns over political influence on monetary institutions.
Bessent said the administration’s economic agenda, including tax policy and deregulation, is strengthening the underlying appeal of U.S. assets and supporting long-term capital inflows. He argued that sound fundamentals ultimately determine currency strength, even if short-term price movements reflect shifting sentiment. According to Bessent, efforts to reduce trade imbalances and encourage domestic investment should contribute to a firmer dollar over time as capital flows respond to improved growth prospects. He added that fluctuations over months or quarters should not be mistaken for structural weakness in the U.S. currency.
On inflation, Bessent expressed confidence that economic growth would not reignite price pressures, citing productivity gains and wage growth that do not necessarily translate into higher inflation. He also pointed to easing housing costs as a potential drag on inflation measures in the coming months. The comments come as markets await signals from the Federal Reserve on the future path of interest rates, with investors closely watching how policymakers balance inflation risks against slowing global growth and financial market sensitivity.
