Dollar outpaces euro in global payments

Investors prefer the greenback for transactions amid the EU’s economic crisis, according to SWIFT

The dollar widened its lead over the euro as the world’s top currency for payments last month, according to a report by the Society for Worldwide Interbank Financial Telecommunications (SWIFT) released this week.

The share of total euro payment transactions slumped to 34.5% in August, falling to the lowest level since 2020. The decline by a full percentage point from July comes amid the strengthening of the US dollar and the euro’s drop of more than 12% against the greenback this year, according to SWIFT data.

As the EU struggles with record-high inflation and a looming energy crisis, investors are switching away from the euro to a more secure currency. The report shows that euro usage has been falling for three months in a row, while the US dollar has been increasing its share as the currency of choice since May, holding the lead for the 15th consecutive month.

The greenback’s share of total transactions rose to 42.6% in August, broadening the gap between payments in the two currencies to the widest since 2020. According to the report, the spread in dollar versus euro payments increased from 1% in February to more than 8% in August.

The report also pointed out that the share of the Chinese yuan in transactions rose to 2.3% despite the country’s economic slowdown, while the Japanese yen, which fell to the lowest rate since 1998 in early September, accounted for only 2.7% of all global payments.

The US dollar has been largely predominant in transactions since 2013, according to SWIFT.

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