US policy factors 'critical' to extent of de-dollarisation shift, Morgan Stanley says

LONDON, Jan 21 (Reuters) - U.S. President Donald Trump's policies astir debt, trade, sanctions, information and the country's cardinal institutions are apt to beryllium captious ​in determining the grade of a displacement distant from the dollar, Wall Street ‌bank Morgan Stanley has said.

In a study connected Wednesday up of a code by Trump successful Davos ‌where helium is expected to reenforce his propulsion to get Greenland, the U.S. concern slope said the modulation toward a "multipolar world" was raising questions astir the dollar's status.

"On net, we deliberation these (policy uncertainty) factors are neutral to somewhat accelerating this modulation distant from the ⁠dollar, but their improvement implicit the ‌near word volition apt beryllium captious successful determining the grade of this shift," it said.

While the dollar's planetary relation has been connected ‍a gradual downward trajectory for the past 25 years, determination was nary evident alternate planetary reserve currency, and gold, presently trading astatine grounds highs, remains its "biggest challenger," the slope said.

The doubling of ​the golden terms implicit the past 18 months means overseas cardinal banks present ‌hold much successful golden - astatine astir $4 trillion - than successful U.S. Treasuries astatine $3.9 trillion, for the archetypal clip since 1996.

The existent questions affecting the dollar besides see U.S. indebtedness and its sustainability, arsenic good arsenic the unit being enactment connected the caput of the Federal Reserve and the independency of apical institutions much broadly.

There is besides elevated commercialized ⁠uncertainty and Trump's usage of tariffs arsenic a ​means to extract governmental concessions, present being witnessed successful ​his standoff with respective European countries implicit Greenland, which besides strains the NATO subject alliance.

Such tensions bring some propulsion and propulsion factors for ‍the dollar.

Morgan Stanley said ⁠past investigation has shown alliances tin boost reserves of the confederation leader's currency held by its partners by astir 30 percent points.

In that respect, a NATO ⁠breakup could beryllium detrimental for the dollar though an progressively insecure geopolitical backdrop could besides nutrient "a formation ‌to quality" driving request for dollars arsenic a safe-haven asset, Morgan Stanley ‌said.

(Reporting by Marc JonesEditing by Tomasz Janowski)