Dollar Tumbles as Treasury's Debt Buyback Plan Fails to Deliver

The US dollar has hit a three-month low against the euro as concerns grow over the Treasury's plan to expand buybacks of longer-dated government debt.

Treasury Secretary Scott Bessent said Thursday that he may increase repurchases even further, following a surprise announcement to double the size of its buybacks of longer-dated debt. This move aims to rein in bond yields, which have jumped this week with the 30-year yield reaching its highest level since 2007.

Analysts say holding yields down will simply shift the burden of fiscal concerns onto the currency, and so far the strategy hasn't achieved its primary goal as yields have crept back higher. 'Bessent's efforts to suppress US yields haven't done much for US yields, but it's undermined the dollar,' said Marc Chandler, chief market strategist at Bannockburn Global Forex.

The dollar index fell 0.05 percent to 98.79, with the euro up 0.03 percent at USD1.1682. The single currency earlier reached USD1.1711, its highest since May 14. Bitcoin continued to surge, reaching USD77,060 after earlier scaling USD79,455, the highest since May 15.

The next test of whether Treasury yields continue to climb may come next Friday when Federal Reserve Chairman Kevin Warsh delivers a speech at the central bank's Jackson Hole Symposium.