On the sidelines of the spring meetings of the International Monetary Fund and World Bank this week, Treasury Secretary Scott Bessent tried to convey an important message about the United States dollar.
Speaking to a crowd of global policymakers, regulators and investors, Mr. Bessent sought to allay fears that had ballooned in recent weeks about the dollar’s global standing and the country’s role as the safest haven during times of stress. He reiterated that the administration would continue to have a “strong-dollar policy” and affirmed that it would remain the currency that the rest of the world wanted to hold, even though it had weakened against most major currencies.
For participants at the event, Mr. Bessent’s comments were a needed salve after a bruising couple of weeks in financial markets as a result of President Trump’s trade war. Violent swings in stocks, coinciding with the weakening of the dollar as investors fled U.S. government bonds, had incited panic.
The fact that Mr. Bessent found it necessary to emphasize that message in front of such a big crowd underscored how precarious the situation had become since Mr. Trump returned to the White House less than 100 days ago. What now looms large are uncomfortable questions about what happens if the international community starts to lose faith in the dollar and other U.S. assets, something that economists warn would be costly for Americans.
“People are playing through scenarios that previously had been judged unthinkable, and they’re playing them through in a very serious kind of way in the spirit of contingency planning,” said Nathan Sheets, the chief economist at Citigroup and a Treasury official in the Obama administration.
“If the United States is going to pursue aggressive economic policies, it’s natural for the rest of the world to step back and say, ‘Well, do we want to buy U.S. assets as we have in the past?’”