REFILE-BUZZ-COMMENT-Protectionist policies to influence currencies

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Jan 22 (Reuters) - Protectionist policies are set to influence currencies, underpinning those believed safe like the dollar and undermining those thought to be risky, especially less liquid emerging currencies.

This is a big issue as many higher-profile currencies like those of BRICS nations are already trading at record lows or close to them.

Because the U.S. dollar - as the world's reserve currency - has a tendency to perform well during risk averse situations, the drops into the unknown for an increasing number of less liquid currencies could stoke the fires of a precarious situation.

The vicious circle stemming from the rising dollar could see the U.S. currency advancing far further than currently expected with the chance of a disorderly phase of adjustment should EUR/USD unexpectedly drop below parity or USD/JPY exceed last year's high.

Traders have little staked on either eventuality, and few economists polled by Reuters expect either move to occur soon. Because traders are still betting that the pound rises, a slide below 1.2000 - which is of great importance for hedging and options - could have a dramatic outcome that may fuel a flight to safety.

Demand for gold may grow, as it is also safe and can mitigate risks that might stem from a surge in demand for the U.S. currency.

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(Jeremy Boulton is a Reuters market analyst. The views expressed are his own, editing by Ed Osmond)

((jeremy.boulton@thomsonreuters.com))