FT News Briefing Will sanctions create a backlash against the dollar?
Apr 8, 2022
Tensions rise in France as right-wing candidate Marine Le Pen gains momentum, shaking bank shares and bond markets. Meanwhile, the Russian company Rusal demands an investigation into war crimes in Bucha. A lively discussion unfolds on how U.S. sanctions against Russia could impact the dollar's global dominance, with central banks considering alternatives like the renminbi. The resilience of the dollar is also underscored against these geopolitical shifts, alongside the historic confirmation of Ketanji Brown Jackson to the U.S. Supreme Court.
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French Market Jitters
- Rising support for Le Pen in French elections caused bank share drops and bond weakening.
- Concerns exist about potential impacts on European unity and Ukraine response coordination.
Rusal Calls for Investigation
- Rusal, a major Russian aluminum producer, called for an investigation into alleged Bucha war crimes.
- Sanctions have severely impacted Rusal by restricting access to raw materials.
Shifting Reserves
- Central banks might diversify reserves away from the dollar if they fear similar sanctions.
- However, the dollar's inertia and the US's allied support mitigate this risk.