(Bloomberg) — Hedge funds are ramping up bearish dollar bets as they await more details on Treasury Secretary Scott Bessent’s new fiscal plan to address the highest borrowing costs in years.

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That pressure was evident on Friday, when the dollar extended a drop triggered by Bessent’s Aug. 19 decision to increase the size of buybacks for longer-dated securities “by at least double.” The announcement sparked the dollar’s worst single-day decline in nearly three weeks and triggered a wave of selling across the cash market. The dollar was little changed in Asia on Monday.

“We’ve seen a pronounced response in particular from hedge fund clients in the linear space, where dollar selling accelerated against a backdrop of persistent dollar supply throughout August,” Torsten Schoeneborn, London-based co-head of G-10 FX trading at Barclays Plc., said on Friday. Real-money flows have been much less directional, he added.

Scott Bessent’s aggressive approach to stem the rise in US borrowing costs has some investors saying that the dollar will ultimately pay the price. They expect any pivot toward active yield management by the Treasury to weaken faith in the dollar.

Pessimism over the dollar is equally evident in the options market. The premium to hedge the dollar’s downside over the next month relative to its upside has climbed to its highest since February, according to a Bloomberg gauge.

“Since the Treasury buyback announcement, we’ve seen broader demand for dollar downside hedges across the FX options market,” said Akshay Saxena, Singapore-based head of FX options trading for Asia at Citigroup Inc.

Saxena said that the sharpest repricing occurred in Swiss franc implied volatility, which measures the expected future movement of the currency and directly impacts option premiums. The franc’s one-month implied volatility jumped to an over two-week high last week, while similar metrics for the euro, sterling and the Canadian dollar also moved higher on renewed institutional interest in greenback put structures, he added.

Demand for dollar put options versus the euro, which gains in value as the greenback falls, was 47% larger than that of dollar call options on Aug. 21, according to data from the Depository Trust and Clearing Corp. based on contracts valued at $150 million or more.