USD Rises to 47.3%, Euro Plummets to 21.9%

• Article
• 2024-08-24
• 11 Comments

The expectation that the US dollar is not preparing to cut interest rates continues to be released, causing other currencies to plummet.

The strong dollar may trigger a new round of currency wars and financial battles.

This time, the dollar is bound to go on a wild harvest, and international payments are undergoing a massive change!

On April 18, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) released its latest report, which mentioned international payment data for major currencies such as the US dollar, euro, renminbi, yen, and pound.

The euro suffered significant losses, with the dollar taking over the euro's market share, while the renminbi remained stable and slightly increased.

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First, according to the data released by SWIFT, the international payment share of the euro is 21.9%, a decrease of 1.3 percentage points month-on-month, and even lower than the level at the end of 2023.

If compared with the data from 2023, the euro can be described as having suffered a heavy loss.

It is important to note that at the beginning of 2023, the euro's share was as high as 37.88%, not far behind the US dollar, and was still a currency capable of challenging the hegemonic status of the US dollar.

However, in just one year, the euro has fallen dramatically.

From 37.88% to 21.9%, it has fallen by nearly 16 percentage points, a loss that is indescribable.

Under the strong counterattack and harvest of the US dollar, even a strong currency like the euro could not withstand it and was mercilessly harvested by the US dollar.

More than half of the market lost by the euro has been incorporated into the US dollar's sphere of influence.

The euro falls, and the US dollar is well-fed!

The latest international payment share of the US dollar continues to rise, reaching 47.3%, with the US dollar's share increasing by 0.8 percentage points month-on-month.

In recent years, it has always been maintained at this level, with ups and downs, and its position is still very stable.

It is important to know that since the US dollar raised interest rates in 2022, a large amount of international capital has flowed to the United States, aiming for high interest rates, while the exchange rates of other currencies have fallen one after another.

The strong position of the US dollar has been maintained for two years.

It seems that the US dollar cannot hold on to cut interest rates, but suddenly it is said that the interest rate cut will be postponed, and even claimed to raise interest rates to 8%, which has shocked the global market.

The US dollar is once again strong, at least the expectation is strong, and the currencies of Asian countries are in a mess, falling to an unbearable level.

After the US dollar and the euro, the pound is still in third place, with a share of 6.5%, while the international payment share of the renminbi is 4.69%, and its share has increased again, ranking fourth in the world, surpassing the yen.

Although the proportion of the renminbi has increased to 4.69%, it seems that it cannot match China's existing comprehensive strength, because China's GDP has long reached 70% of the United States, but the payment proportion of the renminbi is only 9.9% of the US dollar?

What's more, China is still the world's largest trading country, exporting a large amount of goods to the world every year, with the world's first trade surplus, and foreign exchange reserves exceeding 3 trillion US dollars.

Why is the proportion of the renminbi still less than 5%?

On the one hand, this data is released by the SWIFT system and cannot fully cover the transactions of the renminbi, because some trade transactions no longer need to go through SWIFT, such as Sino-Russian trade.

Last year, the trade volume between China and Russia was more than 240 billion US dollars, and Russia has long been kicked out of the system.

80% of Sino-Russian trade is settled in local currency.

Moreover, China also has its own CIPS system, which is the cross-border payment and settlement of the renminbi.

In the past, CIPS needed to connect to SWIFT messages to achieve settlement, so there is a lot of data overlap.

However, since China officially launched the integrated cross-border innovative service terminal last year, it means that CIPS no longer needs to go through SWIFT to complete all transactions.

However, this technology currently covers a small number of countries, and it is just starting, but it is of great significance and is an important tool to promote the internationalization of the renminbi.

On the other hand, China's development in recent years has indeed been very fast, but its financial strength still needs to be improved, which is an objective fact.

The economic volume is already the second in the world, equivalent to four Japans, China's manufacturing scale is already the first in the world, equivalent to the sum of the United States, Japan, Germany, and India, and China's total trade has been at the top of the world for many years, which are all facts.

However, while the economic and manufacturing strength is continuously improving, the financial strength has not reached the matching level, and there is a lot to improve, but this is also related to China's development model, taking manufacturing as the foundation of the country, while the US economy relies on the financial industry, and the financial development is also reasonable.