Oliver Mangan: US rate cuts would undermine strong dollar

The stresses that have emerged in parts of the global banking system recently could have a bigger impact on the US economy than elsewhere

US Federal Reserve Chairman Jerome Powell has delivered a rapid pace of increase in US interest rates. Picture: Manuel Balce Ceneta

Interest rates have been a key driver of currency markets in the past couple of years. 

The dollar was in the ascendancy from mid-2021 through to autumn 2022, as a rapid pace of increase in US interest rates, and rising US bond yields drove the currency higher. It rose by circa 25% in trade-weighted terms during this period, making significant gains against a broad range of currencies.