Just 5% away! Dollar initiates a beatdown
In international trade among countries, the US dollar is the most common and primary currency, but this is now changing.
According to relevant statistics, the proportion of the US dollar in global payments is gradually decreasing, with the latest figure standing at 41.38%, while the payment proportion of the euro has been on the rise, reaching 36.12%.
The gap between the two is only 5 percentage points!
01, Euro in 2nd place
This data may not be 100% accurate, but it better reflects the current state of global payments.
If we look at the data from Swift, the US dollar still dominates, but Swift itself is a payment system built on the US dollar, and only calculating this system is, of course, incomplete.
Some countries, such as Russia and Iran, have been excluded from this system due to various factors, but these countries still have a significant amount of payments, including many in Chinese yuan.
There are also countries like China, which, even though they are within this system, are simultaneously building their own payment systems. In recent years, China's own system has connected with over 180 countries, and the payment amounts have been continuously increasing.
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Therefore, it is somewhat challenging to fully account for all payments, but the fact that the euro's payment proportion is continuously catching up is undeniable.
But it is clear that this is something the United States does not wish to see.02, U.S. Suppression
It has been observed that the United States ranks first globally in many aspects, and over the years, the U.S. has consistently employed a fundamental strategy of suppressing the country that ranks second globally in various fields.
Russia's military power ranks second, so the U.S. suppresses Russia; Japan's economic strength once ranked second, so the Plaza Accord was used to suppress Japan.
The euro, which officially started in 1999, has only been in existence for just over 20 years and has already risen to the second position in the international payment market, something the U.S. cannot tolerate. Therefore, the U.S.'s series of strategic moves are clearly aimed at suppressing the euro.
Under the continuous interest rate hikes by the Federal Reserve, the euro's exchange rate once collapsed, breaking the 1:1 ratio, with the lowest exchange rate against the U.S. dollar even reaching only 0.95.
03, Euro Surge
However, recently, the euro has had a chance to turn things around.
By the end of 2022, the euro had even rebounded to a high of 1.0798, with a rebound of over 13% in just two months.
The circulation of any currency requires a substantial amount of funds to increase the payment ratio. Only when there is an increasing amount of currency in the market will the payment ratio also increase.
In recent years, the U.S. economic situation has not been very good. Due to inflation, the federal government has raised interest rates seven times in a row to stimulate the economy.At the same time, U.S. Treasury bonds are being continuously sold off, and liquidity is becoming increasingly poor. For the United States, this is in itself a nuclear-level financial risk that could be detonated at any time.
The U.S. dollar continues to appreciate, but a phenomenon known as "dollar scarcity" appears to a certain extent, which is a silent occurrence. This perfectly illustrates that the dollar has already reached a point where it can no longer be "harvested."
The euro has captured a significant market share at this critical juncture, increasing the proportion of currency usage.
04, Dollar Miscalculation
Logically speaking, the U.S. dollar has been at a high level for over a year, which seems to be unfriendly towards the euro.
There are always many speculative funds in the international market, characterized by their pursuit of profit, avoidance of harm, and quest for excess returns. As the dollar strengthens and the euro declines, funds entering the United States are expected to accelerate.
Especially with the Federal Reserve raising interest rates several times and the European conflict remaining unresolved, the United States could easily become a gathering place for global funds.
However, this situation has not actually occurred. Europe has indeed experienced a certain degree of capital outflow, but it is far from meeting U.S. expectations.
The reason is simple.
Firstly, although the dollar keeps rising, most assets priced in dollars are continuously falling, leading international capital to only be willing to buy the dollar with high leverage in the foreign exchange market, rather than actually exchanging real money for dollars to hold stocks or bonds priced in dollars.Secondly, over the years with the repeated harvesting of the US dollar, other countries have gradually developed their own coping experiences.
Many countries are conducting trials of "oil-non-US dollar currency" and accelerating the establishment of new settlement market systems, thereby reducing their dependence on the US dollar.
If China succeeds in settling oil with the yuan, it will greatly further reduce the global payment share of the US dollar. If at the same time the euro takes the opportunity to increase its payment share, the US dollar may be forced to give up the top spot in the near future.
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