The US dollar is set to close August down 0.9% on the Bloomberg Dollar Spot Index, its second straight monthly loss, after the Treasury doubled the size of its debt buyback operations. Treasury Secretary Scott Bessent defended the move at the G20 finance meeting in Asheville, pushing back on investor Stanley Druckenmiller's criticism that the buybacks are a mistake.
The US dollar is on track to close August with a 0.9% loss on the Bloomberg Dollar Spot Index, following a 1.3% slide in July. The currency fell 0.8% on August 19 alone, touching its lowest level since late May.
Treasury doubles its buyback firepower
On August 19, the Treasury announced it would accelerate its liquidity-support buyback program targeting longer-dated government securities. The maximum size of certain buyback operations will jump to $4 billion per event, double the previous $2 billion cap, with the expanded program running from September 9 through November 4.
The move follows a spike in borrowing costs: the 30-year Treasury yield hit 5.30% in mid-August, its highest level since 2007. Bessent added to the pressure on August 20 when he suggested buybacks could exceed even the announced figures.
Bessent defends the intervention
Bessent used the G20 finance ministers meeting in Asheville, North Carolina, on Monday to defend the strategy, telling CNBC that the US bond market has been the best performing market since the president came into office. He argued that Treasury yields are flat since the start of the administration, though CNBC notes yields have in fact moved slightly higher amid tariff pressure and persistent inflation.
His comments answered a critique from billionaire investor Stanley Druckenmiller, who called the buyback expansion a mistake in an August 24 Wall Street Journal op-ed. Bessent pushed back sharply, telling CNBC: "He changes his mind a lot, and he doesn't like losing money", adding that he thought Druckenmiller had lost money the day the editorial ran.
Strategists flag dollar debasement
Strategists at MUFG, Scotiabank, and Citigroup have all flagged further downside risk for the dollar since the buyback expansion, framing it as part of a broader debasement pattern where fiscal policy choices make holding the currency less attractive relative to alternatives.
For currency traders, the buyback expansion gives a fundamental reason to stay short the dollar through at least November, when the current program window closes. The 30-year yield remains the variable to watch, with a move below 5% marking a near-term win for the Treasury but at a further cost to dollar credibility.
Sources: Crypto Briefing, CNBC
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