The dollar’s share in international transactions rises to a record high at the expense of the euro

The dollar has gained more strength in international payments than it has ever been, according to the latest transaction data compiled by global financial messaging service SWIFT.

The figures show that dollar-related trading rose to a record 46% in July, compared to just over a third a decade ago. The dollar was the first currency in terms of the number of transactions, followed by the euro, the pound sterling, the yen and the yuan, according to “Bloomberg” and viewed by “Al”.

Major global banks use Swift, or the Society for Worldwide Interbank Financial Telecommunications, to communicate with each other and facilitate currency transactions between banks. The information SWIFT tabulates — about 200 million confirmations of forex trades annually — has provided a window into global flows since the alliance began compiling them in 2010. The latest figures reflect a technical upgrade based on changes this year to how trades are reported.

The US dollar widens the gap with the euro

The share of the dollar and the euro in international transactions

The share of the dollar and the euro in international transactions

While the SWIFT data does not include the entire currency market, it reinforces the notion that the dollar’s role in international finance remains strong – even as some efforts toward greater diversification emerge. For example, the multilateral lender founded by the BRICS group of emerging market countries aims to raise the share of financing it raises in local currencies to 30% from less than 20%.

The increased dollar proceeds from SWIFT transactions have come largely at the expense of the euro, which peaked at 46% in 2012. Last month, the European common currency’s share of trades was at an all-time low, at just under a quarter.

The SWIFT data also reveals the increasing frequency of yuan-related transactions, as the Chinese currency has gradually become more integrated into global foreign exchange flows. In July, for only the second time ever, more than 3% of instructions sent via SWIFT were for the yuan, while in 2010 this number was around 0.03%.

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