The euro was the most used currency for global payments last month, the first time it has outpaced the dollar since February 2013.
Data from the Society for Worldwide Interbank Financial Telecommunications, which handles cross-border payment messages for more than 11,000 financial institutions in 200 countries, showed the European Union’s single currency and the greenback were followed by the British pound and the Japanese yen.
The Canadian dollar overtook China’s yuan for the fifth spot, Swift said.
Trade upheaval, a pandemic-induced recession and political disharmony renewed pressure to reduce the share of international payments in dollars.
The U.S. currency has weakened more than 11% from its March peak, based on a Bloomberg index that measures it against a basket of major peers, and many observers are predicting its valuation to drop further.
The dollar remains the top funding currency, with about half of all cross-border loans and international debt securities denominated in the greenback, the Bank of International Settlements said in a July report.
About 85% of all foreign-exchange transactions occur against the dollar and it accounts for 61% of official foreign-exchange reserves, the BIS said, adding that about half of international trade is invoiced in the U.S. currency.
Swift releases the data in its monthly RMB Tracker on the renminbi’s progress toward becoming an international currency.
About 37.82% of the Swift cash transfers were handled in euros last month, the largest portion since February 2013. This was an increase of more than 6 percentage points from the end of last year.
The U.S. dollar’s usage fell about 4.6 percentage points from December to 37.64% of transactions last month. The dollar peaked at 45.3% in April 2015. The British, Japanese and Canadian currencies together held 12.25% of transactions in October.
The yuan’s share fell to 1.66% of transactions, in its worse showing since April. The Chinese currency was ranked 35th in October 2010, when Swift started tracking currencies in this way. It progressed to the top six in 2014, where is has general averaged slightly less than a 2% share globally since.
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By Alex Tanzi
Published by Bloomberg
Republished by The 21st Century
The views expressed in this article are solely those of the author and do not necessarily reflect the opinions of 21cir.