Archive · 24 Aug 2026
Hedge Funds Increase Dollar Shorts Ahead of Bessent Fiscal Plan
Hedge funds are investors that are betting the US dollar will lose value.
They increased these bets while waiting for more details about Treasury Secretary Scott Bessent’s fiscal plan.
Bessent said the Treasury would at least double its purchases of longer-term government securities.
After that announcement, the dollar had one of its biggest daily drops in nearly three weeks.
Traders also bought more options that protect against the dollar falling.
Interest in these options was especially strong for the Swiss franc, euro, British pound and Canadian dollar.
In Asia, traders focused on short-term options involving the Korean won, Thai baht and Singapore dollar.
The dollar changed little in Asian trading on Monday after its recent decline.
Hedge funds are increasing bearish dollar bets while awaiting more details of Scott Bessent’s fiscal plan.
Bessent’s Aug. 19 decision to at least double longer-dated Treasury buybacks preceded the dollar’s sharpest one-day decline in nearly three weeks.
Barclays reported accelerated dollar selling among hedge fund clients, while real-money investors were less directional.
Demand for dollar downside hedges reached its highest relative level since February, according to a Bloomberg gauge.
Dollar put-option demand exceeded call-option demand by 47% on Aug. 21 for contracts valued at $150 million or more.
- Who
- Hedge funds, currency traders, Scott Bessent, Barclays Plc. and Citigroup Inc.
- What
- Investors increased bearish dollar positions and demand for options protecting against a dollar decline.
- When
- The developments followed Bessent’s Aug. 19 announcement and were reported through Friday and Monday trading; option data cited covered Aug. 21.
- Where
- The activity occurred across global foreign-exchange markets, including London, Singapore and Asian markets.
- Why
- Some investors believe more active Treasury management of borrowing costs could weaken confidence in the dollar.
- Fiscal-plan announcement
- On Aug. 19, Scott Bessent announced that buybacks for longer-dated securities would increase by at least double.
- Dollar reaction
- The announcement preceded the dollar’s worst single-day decline in nearly three weeks.
- Hedge-fund activity
- Barclays said dollar selling accelerated among hedge-fund clients in its linear trading business.
- Options hedging
- The premium for protecting against dollar downside over the next month reached its highest level since February, according to a Bloomberg gauge.
- Put-versus-call demand
- Demand for dollar puts against the euro was 47% greater than demand for dollar calls on Aug. 21 for contracts worth at least $150 million.
- Regional focus
- Asian trading demand concentrated on short-dated options involving the Korean won, Thai baht and Singapore dollar.
- Volatility
- One-month Swiss franc implied volatility rose to an over-two-week high, while comparable measures for the euro, sterling and Canadian dollar also increased.