Merrill analyserer dollarens fremtid som følge af krigen i Ukraine og de usædvanligt omfattende økonomiske sanktioner. Merrill tror, at dollaren på kort sigt vil styrkes, fordi den nu engang er en “safe haven”, som påvirke alle investorers dispositioner. Det er USA’s overvældende økonomiske styrke, som giver dollaren en fordel, og det ses også i, at USA kan bestemme slagets gang omkring sanktioner, fordi lande kan udelukkes fra det amerikanske finanssystem og fra brugen af dollar. Det vil uvægerligt føre til bestræbelser – for andre lande – for at finde et alternativ, skriver Merrill. Det er primært Kina opmærksom på. De amerikanske sanktioner kan med andre ord udgøre en trussel mod dollarens status, skriver banken.
The U.S. Dollar in the Wake of Unprecedented Economic Sanctions-I
Q&A: U.S. Dollar Outlook:
What is the near- and medium-term outlook for the dollar? The U.S. dollar is considered a
“safe-haven” currency and benefits from risk-off sentiment related to elevated geopolitical risk.
Year-to-date, the Bloomberg Dollar Spot index, a trade and liquidity weighted index, is up over 2%.1
Forward-looking economic growth differentials, which previously favored the dollar over the euro,
were also amplified because Europe is more economically exposed to the Ukraine crisis.
Upside
risk to domestic inflation is also pressuring the Federal Reserve (Fed) to raise rates faster, favoring
the dollar on an absolute and relative basis. We expect elevated geopolitical risk to remain
supportive of the dollar in the near term, but valuations are a medium-term headwind for the dollar,
and we continue to see dollar strength eventually giving way to valuations.
Why is the U.S. dollar considered a “safe-haven” currency? The U.S. dollar’s hegemony is a
product of geoeconomic power. Economic size, existing networks/alliances, deep and liquid capital
markets, technological supremacy, military might, fiscal responsibility, and sound governance—all
are tangible, measurable properties that are viewed favorably by the foreign exchange market
participants, according to various empirical studies. Transparency, predictability, trust, credibility
and forward guidance are also key metrics for central banks, multinational corporations and
individuals to gauge confidence in a sovereign currency.
The U.S. has been historically dominant
across most of these factors, but certainly has a growing set of vulnerabilities and threats. Fiscal
responsibility and the aggressive use of sanctions are two examples of emerging vulnerabilities.
Why is dollar hegemony important for investors? The U.S. dollar’s status as the primary global
reserve currency has been called an “exorbitant privilege,” as has provided the U.S. with several
competitive advantages and tools in the macroeconomic and international-relations arenas. These
benefits include the ability to finance twin (current and fiscal account) deficits at lower rates, to use
dollar-based sanctions as a tool for economic statecraft, to leverage the international transactions
infrastructure for financial intelligence, and to be the global liquidity provider of last resort. Because
of the depth and breadth of information that goes into foreign exchange market pricing, currency
status can also broadly be viewed as a proxy for economic power, a real-time economic scoreboard.
Larger shares of central bank reserves and cross-border trade allocated to dollars, and foreign
exchange trading using the dollar as a base currency, are all votes of confidence.
Reserve and transactional dominance form the backbone of the U.S. economic sanctions power that
is clearly on display in Russia, with obvious investment implications. The rest of the world depends
on the dollar-based system to purchase a number of critical resources. The U.S. Treasury
Department, through its Office of Foreign Assets Control (OFAC), can sanction banks and individuals
to blacklist them from the dollar-based system. Countries can also experience non-punitive effects
of dollar dominance. For example, during the 2008 Great Financial Crisis (GFC), the interbank
markets and dollar lending shut down, and China could not trade with neighbors.
How do sanctions put the U.S. dollar’s status at risk? From other countries’ perspectives,
dependency on the dollar is a significant vulnerability, and the recent sanctions make that even more
apparent. The Chinese economy, for example, represents a growing share of global trade and more
than a quarter of global nominal gross domestic product (GDP) over the last five years, yet most of its
trade is transacted in dollars. Globally, the dollar represents 55% of central bank reserves versus just
2.5% for China, while the large majority of international transactions that run through the Society for
Worldwide Financial Telecommunication (SWIFT) system are in U.S. dollars or euros. And the dollar also takes the lion’s share of foreign exchange trading. Broadly speaking, the rest of the world has to access the U.S. banking system or use dollars to participate in the global economy.
Bottom line: The
dollar is an Achilles’ heel for China, Russia and other countries that are susceptible to loss of access to
the dollar system to pay for critical resources. This provides enormous incentive for an alternative.
