New US Treasury Secretary Bezent backs the dollar: the Trump administration pursues a “strong dollar” policy

The Zhitong Finance App learned that the newly appointed US Treasury Secretary Scott Bessent (Scott Bessent) said that under the leadership of President Donald Trump, the US will continue the “strong dollar” policy that it has been firmly pursuing for a long time.

“The so-called strong dollar policy (strong-dollar policy) remained completely unchanged during Trump's presidency,” Bezent said in an interview with the media on Thursday local time. “We want the dollar to stay strong. At the same time, we don't want other countries to manipulate trade by weakening the exchange rate of their own currencies.”

Bessent pointed out that many countries have “large surpluses accumulated; this is not a free trade system.” He mentioned that this may be partly due to exchange rate issues, while “interest rate suppression” may also be a key factor in some places, but he did not specifically name any specific country.

At the time of Bezent's speech, the Bloomberg Dollar Spot Index had little change, then fell to the lowest point of the day during the afternoon trading session in New York time. The new US Treasury Secretary Bezent reiterated that the Trump administration will continue to implement a “strong dollar” policy, emphasizes fair trade and opposes other countries manipulating trade through currency depreciation.

Although Trump criticized exchange rate appreciation during the election campaign, his policies are still believed to help increase the value of the dollar. The US dollar index fluctuated limited after Bezent's speech, and the market continued to pay attention to US foreign tariff policy and developments at the global trade level.

For decades, senior US government officials have emphasized the huge value brought by a “strong dollar” and viewed it as a strong proof of the vitality of the US economy. During Trump's first term, many thought the so-called strong dollar policy was put on hold because the Trump administration said in the previous term that a strong dollar curtailed US exports to a certain extent and reduced the overseas income of US multinationals.

However, since Trump was elected President of the United States and returned to the White House in November last year, the US dollar has been strengthening. The market expects that the policies he has led — in particular, raising foreign tariffs and reducing taxes on domestic companies — will boost US economic growth and inflation, and slow the rate of interest rate cuts by the Federal Reserve, thereby driving capital to continue to pour into the US dollar to raise the exchange rate of the US dollar against each country's sovereign currencies.

In his recent public speaking campaign, Trump repeatedly commented on the disadvantages caused by the appreciation of the exchange rate. However, just as the tariff policy he is leading is quite uncertain, he himself criticized exchange rate appreciation while vowing to maintain the dominant position of the US dollar in global financial markets and support policies that economists and strategists believe will increase the real value of the dollar.

“We want fair trade, and part of that is taking a tough stance on currency and trade rules.” Bessent said in an interview.

It is worth noting that after a week of turbulent “capricious” Trump's tariff policy, the global money market caused hedge funds to withdraw from dollar trading one after another and turn their attention to the yen, a sovereign currency with safe-haven properties. As investors sought safe haven deals under the threat of Trump's tariff escalation, the yen and gold were favored by global investment institutions, while the dollar, another safe-haven currency, experienced a profitable sell-off due to its high position and uncertainty about Trump's tariff policy.

Driven by global central banks speeding up the scale of purchases and investors seeking safe-haven under the threat of Trump's tariff escalation, gold, a commodity with safe-haven properties, has reached record high prices for many consecutive days. According to most investment institutions, the sharp rise in risk aversion is the most direct reason driving up the recent rise in international gold prices, and the market expects that the trend of easing the Fed's monetary policy will not change, and gold will still be mainly bought and held on dips.

In terms of the safe-haven sovereign currency yen, foreign exchange market strategists generally point out that since the Bank of Japan's recent interest rate hike and future monetary policy path are hawkish, while the policies of major global central banks such as the Federal Reserve, the European Central Bank, and the Bank of England all tend to be relaxed, there is still room for the yen to rise this year.