According to recent transaction data compiled by global financial messaging service Swift, the dominance of the US dollar in international payments is stronger than ever before. The figures reveal that dollar-related trades reached a record high of 46% in July, compared to just over one-third a decade ago. This makes the dollar the most widely used currency for transactions, followed by the euro, pound, yen, and yuan.
Swift, which is used by large global banks to facilitate interbank currency deals, collects and analyzes information on global flows. While this data does not cover the entire currency market, it provides valuable insights into the role of the dollar in international finance. Despite some efforts towards diversification, the dollar continues to maintain its robust position.
Interestingly, the rising dominance of the dollar has come at the expense of the euro, which peaked at a 46% share in 2012. Last month, the euro's share of trades reached its lowest point on record, with slightly less than a quarter of transactions involving the European common currency.
Swift's data also highlights the increasing popularity of the yuan in global foreign-exchange flows. In July, more than 3% of instructions sent via Swift involved the Chinese currency, marking only the second time this has occurred since the data has been collected. This is a significant increase compared to 2010 when yuan-related transactions accounted for only 0.03% of the total.
The strong presence of the US dollar in international payments underscores its status as a global reserve currency and reflects its stability and widespread acceptance. While efforts towards diversification exist, the latest data supports the notion that the dollar's role in international finance remains highly significant.