Dollar steals global euro payment flows amid market…

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Payments using the euro fell to 34.5% of the market in August, down a percentage point from the previous month, according to data from the Society for Worldwide Interbank Financial Telecommunications, or SWIFT, a global messaging company. financial. Meanwhile, the dollar has gained market share since May and remained in first place for the fifteenth consecutive month with a 42.6% share, according to the report released on Wednesday.

As Europe teeters on the edge of recession amid record inflation and an energy crisis compounded by the escalating Russian war in Ukraine, the euro has lost its appeal for transactions. Instead, investors are fleeing to the safety of the dollar and further cementing its place as the currency of choice for investors. The greenback has dominated global payments, for the most part, since 2013.

These movements also pushed the gap between payments in the two currencies to the largest in almost two and a half years, with the proportion of payments in euros falling to the lowest since June 2020. The gap widened from from just over 1 percentage point in February to over 8 percentage points in August. This corresponds to the depreciation of more than 12% of the euro against the dollar this year.

Yet despite falling in use for the third consecutive month, the euro retained its place as the world’s second most widely used legal tender after the greenback, ahead of currencies such as the pound sterling and the Japanese yen.

Elsewhere, the Chinese yuan’s share of transactions rose to its highest level since January at 2.3%, even as the country grapples with an economic slump. And the use of the Canadian dollar was the worst since February 2018. The loonie has fallen over the past week and continued to trade Wednesday at two-year lows against the dollar.

A troubled Japanese yen, which has fallen to an all-time low Since 1998 earlier this month and is down about 20% year-to-date against the dollar, has also not gained ground on trades. Use of the yen fell slightly in August to just 2.7% of all global payments, its lowest level since May. BM

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Elaine R. Knight