US Treasury Secretary Timothy Geithner seems to be plotting a safe glide path for a dollar that investors widely expect may fall further despite Tuesday's bounce.
When he broke an eight-month silence on the dollar on Monday, Geithner stressed the need to maintain confidence in the currency, a sharp change from the well-worn Treasury mantra that a strong dollar is in the United States' best interest.
What Washington needs is a dollar weak enough that exports get a lift to help keep a wobbly economic recovery on track, but not so weak that creditors flee. "He is pulling the rip cord on one of a series of parachutes for the dollar," said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Connecticut.
As long as the Federal Reserve is printing money to try to energize the economic recovery, investors will take that as a signal to sell dollars. The Fed is widely expected to announce its next round of asset purchases in November.
The central bank's so-called quantitative easing "represents the gravitational pull of the earth and there is nothing to prevent the dollar falling," Gilmore said.
From Washington's point of view, the Fed's stimulus is needed medicine not only for the US economy, but for the world at large. If the US recovery goes off the rails, the global economy will suffer as well. But a dollar crash is in no one's interest.
That's where Geithner's confidence comment comes in. As long as the world has trust in the dollar over the long haul, the United States can avoid some of the unpleasant side effects of a weakening currency - namely high imported inflation and a rush to dump Treasury debt and other dollar-denominated assets.