Dollar Weakness Predicted as Treasury Expands Bond Buybacks

U.S. Treasury Secretary Scott Bessant's expansion of government bond buybacks has Wall Street predicting a further weakening of the dollar.

Citigroup analysts believe that if the Treasury Department continues to lower long-term interest rates, it will put additional downward pressure on the dollar in the short term.

The dollar index fell 0.8% during the day to its lowest level since May 12, with the currencies of the 10 major countries (G10) all rising against the dollar and the yen jumping 1% at one point.

Citi strategists noted that 'the biggest price to pay to lower interest rates in this way is a weak currency.'

As a result, Citi recommended using dollars as a procurement currency to invest in currencies of emerging economies with high interest rates.