Tehran (ISNA) – Recently, the dollar was near its lowest level in two years. On the other hand, SWIFT declared that euro’s share of payment has exceeded US dollar for the first time in 7 years, and RMB’s international payment has dropped to the sixth place in the world.
For further discussing these issues, we’d asked Ed Moya for a commentary. Ed Moya is Senior Market Analyst at OANDA.
Investors are expecting the US to embrace globalization
Asked about whether he thinks that Euro’s share will continue to raise in the global transactions and central banks’ reserves in the near future, Moya said, “The euro’s usage has increased mainly at the expense of the British pound and Japanese yen and not so much the dollar. (**Note basing that off the Society for Worldwide Financial Telecommunications). With President-elect Biden taking office in January, investors are expecting the US to embrace globalization and that will help the dollar reassert dominance in the global transaction”.
Prediction about the value of dollar if Biden wins
According to Moya, In President Biden’s first year, the dollar should weaken around 10% against most currencies. The Fed will be the last advanced economy to raise rates and that should keep the dollar as a funding currency for all of 2021. The economic outlook in Europe is bleak, but any dollar strength in the first quarter should be short-lived.
Yuan’s share in the global transactions
“The Chinese Yuan’s share has fallen but that should be temporary,” said Mr.Moya, adding that: “The US-China trade war hurt China overall, but the recent RCEP should help drive Yuan usage. The Biden administration will likely bring some normalcy back to global trade and that will benefit China the most”.