The dollar’s role in international payments has never been stronger, according to the latest transaction data compiled by global financial messaging service Swift.
The figures show greenback-related trades rose to a record 46% in July, compared with slightly more than one-third a decade ago. The dollar was the top currency as measured by transaction count, followed by the euro, pound, yen, and yuan.
Large global banks use Swift, or the Society for Worldwide Interbank Financial Telecommunication, to communicate with each other and facilitate interbank currency deals. The information Swift tabulates — like some 200 million FX trade confirmations annually, for example — has offered a window into global flows since the consortium began compiling it in 2010. The latest figures reflect a technical upgrade based on changes this year to how trades are reported.
While Swift’s data does not encompass the whole currency market, it bolsters the idea that the greenback’s role in international finance remains robust — even as some efforts emerge toward more diversification. For example, the multilateral lender founded by the BRICS group of emerging-market nations aims to lift the share of funding it raises in local currencies to 30% from less than 20%.
The dollar’s increasing tally of Swift transactions has largely come at the expense of the euro, which peaked at a 46% share in 2012. Last month, the European common currency’s share of trades was its lowest on record, at slightly less than a quarter.
Swift’s data also reveals the increasing frequency of yuan-related transactions as the Chinese currency gradually becomes more embedded in global foreign exchange flows. In July, for just the second time on record, more than 3% of instructions sent via Swift involved the yuan, while in 2010, that figure was roughly 0.03%. — Bloomberg
