Euro outpaces dollar for global payments for the first time since 2013

Trade upheaval, a pandemic-induced recession and political disharmony weigh heavily on a weakening greenback

A euro currency symbol sits on display in the visitor centre at the European Central Bank (ECB) building in Frankfurt, Germany, on Monday, Nov. 4, 2019.  The ECB started a new era on Friday when Christine Lagarde became the institution's first female president -- and for now its sole female policy maker. Photographer: Alex Kraus/Bloomberg

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 US currency has weakened more than 11 per cent 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 per cent of all foreign-exchange transactions occur against the dollar and it accounts for 61 per cent of official foreign-exchange reserves, the BIS said, adding that about half of international trade is invoiced in the US currency.

Swift releases the data in its monthly RMB Tracker on the renminbi’s progress towards becoming an international currency.

About 37.82 per cent 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 US dollar’s usage fell about 4.6 percentage points from December to 37.64 per cent of transactions last month. The dollar peaked at 45.3 per cent in April 2015. The British, Japanese and Canadian currencies together held 12.25 per cent of transactions in October.

The yuan’s share fell to 1.66 per cent 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 it has generally averaged slightly less than a 2 per cent share globally since.