Dollar Slides Amid Skepticism Over Treasury's Bond Buyback Plan

The US dollar is set to end the week in negative territory as investors express skepticism over the Treasury's bond buyback strategy.

US Treasury Secretary Scott Bessent announced plans to increase government repurchases of Treasuries, which will double the size of buybacks on longer-dated securities over the next quarter. However, this move has done little to stem the selloff in US Treasuries and weighed heavily on the dollar.

The euro is hovering near a three-month high against the dollar, last trading at $1.1693, while sterling edged toward a six-month peak, up 0.08% to $1.3643. The Australian and New Zealand dollars have also climbed to two-and-a-half-month highs.

Currency strategist Carol Kong of Commonwealth Bank of Australia said the Treasury's long bond buybacks are 'another example of the US government using unconventional tools to manage borrowing costs.' This has raised concerns among investors about the credibility of US institutions and the potential for further dollar hedging and diversification.