Is the Federal Reserve preparing to shore up the dollar with a dose of higher interest rates? The central bank has historically resisted such moves, and some Fed officials privately believe that nothing short of a full-point hike will help the greenback. But traders were left to ponder the prospect after Chairman Alan Greenspan told Congress the "thing that has worried me most is clearly the weakness in the dollar." In a July 20 testimony to the Senate, Greenspan said the dollar's drop this year--8% against currencies of the nine largest industrialized nations, on a trade-weighted basis--is "bad for the economy," adding that it could trigger higher inflation if not reversed.

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