Persistent US inflation is putting a hold on American interest rate cuts and strengthening the dollar relative to other currencies. For now, the effects are limited to import-heavy east Asian economies. The Bank of Japan has spent nearly $60 billion to prop up the yen after a 10 per cent depreciation to the dollar this year. A 6.5 per cent fall in the won brought the South Korean finance minister to Washington to plead for monetary mercy. Analysts expect the dollar only to rise this year, putting other central banks into uncomfortable positions. The euro and pound have already depreciated by three and 1.6 per cent in 2024, respectively. Raising interest rates to support the currencies will only push advanced economies further into low growth territory. Economists celebrating low inflation may have their hopes dashed by a looming currency crisis.