FxWirePro: Dollar continues to dominate as preferred currency for global payments

Despite warnings from any analysts against the demise of the U.S. dollar as the global reserve currency amid the rise of the euro, Chinese yuan, and United States’ excessive use of dollar-based sanction on many countries like Russia, Iran, Venezuela, data from Swift shows that Dollar continues to remain dominant in the global payment system.

According to latest data, the U.S. dollar was used to make 39.7 percent of the global payments, higher than its January bottom around 38.5 percent, and still higher than the euro, which enjoys 34.2 percent share. Euro remains the closes in challenging dollar’s dominant position, whereas other currencies remain far off. Any forecasts suggesting that the Chinese yuan would replace the USD as the global reserve currency and the preferred currency in global payments is highly likely to be incorrect at least in the medium term, as the Chinese yuan only enjoys 1.7 percent market share in global payments.

In addition to the USD’s dominance in global payments, the green buck also dominates as the reserve currency. Though dollar’s reserve position has declined to a five-year low, it still dominates with 62.7 percent market share according to the latest numbers from the International Monetary fund. 

We believe that the dollar’s demise isn’t happening anytime soon.