NEW YORK (Bloomberg) The corporate tax holiday on foreign profits being debated by Congress may help strengthen the dollar after its worst first half since 2006.Companies from Pfizer Inc to Cisco Systems Inc may use the reduction in income tax on repatriated profits to bring back as much as $700 billion to create jobs and spur investment, according to a study by the Congressional Joint Committee on Taxation. That's double the amount from the last tax holiday in 2005, which helped strengthen the Dollar Index 13 percent, the biggest rally in eight years.As companies bring back profits, they will need to convert foreign currency, adding demand for dollars at a time when more analysts have been raising their bets on the greenback. Now, 28 percent say it will gain this year against the euro, up from 23 percent in March who predicted a stronger dollar in the third quarter, according to data compiled by Bloomberg. This may hurt the Obama administration's plans to cut the 9.1 percent jobless rate, by making exports more expensive to foreign consumers.“It would very likely be positive for the dollar,” said Vassili Serebriakov, a currency strategist in New York at Wells Fargo & Co, the most-accurate foreign exchange forecaster in the six quarters ended March 31. “The experience of the Homeland Investment Act of 2005 did provide some tangible support for the dollar. If we get something along the same lines, there will be expectations for the dollar to benefit from those repatriation flows.”IntercontinentalExchange Inc's Dollar Index, which tracks the dollar against the currencies of six trading partners including the euro, yen and pound, fell 1.7 percent to 74.349 last week in New York. It weakened six percent in the first and second quarters, the most in the first half of a year since 2006, as stocks, commodities and bonds rallied.The Dollar Index rallied 0.3 percent yesterday to 74.514 as of 10.20am in London, snapping yesterday's drop.“I heard US funds are buying the dollar,” said Nobuhiko Akai, senior manager of the foreign-exchange trading department at Bank of Tokyo-Mitsubishi UFJ Ltd. “I've heard about the tax cut a few times since spring.”The Standard & Poor's 500 Index gained six percent in the six months through June and S&P's GSCI index of raw materials climbed 2.7 percent as the Federal Reserve's $600 billion asset purchase programme boosted demand for higher-yielding assets.