Dollar drops following Donald Trump selects Scott Bessent to Treasury role
Date
11/25/2024 8:41:33 AM
(MENAFN) On Monday, the US dollar weakened while Treasuries saw gains after the nomination of Scott Bessent as Treasury assistant helped alleviate concerns about president-elect Donald Trump’s proposed trade tariffs.
The dollar index, which measures the currency against a basket of others including the yen and euro, dropped by as much as 0.7 percent in Asia, later recovering slightly to a 0.6 percent decline. Meanwhile, the euro strengthened by 0.7 percent against the US dollar.
The index had surged over 7 perecnt since the start of last month, driven by expectations that Trump's trade and tax policies would increase inflation and push US interest rates higher, benefiting the dollar.
However, Bessent’s appointment is seen by investors as a signal that Trump’s policies, particularly regarding taxes, may be toned down, as Bessent had previously described sweeping tax proposals as overly ambitious.
Previously this month, Mr Bessent informed CNBC that he would suggest that taxes be “layered in gradually” to mitigate the threat of shocks in the market.
“Having at least one significant advocate around the cabinet table arguing against persistent trade taxes is a positive for markets,” stated Paul Donovan, head economist at UBS Global Wealth Management.
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