Tehran (ISNA) – For the first time in the last 8 years, Euro became the most used currency for global transactions according to the SWIFT; We’d asked professor Hanke for a commentary.
Steve H. Hanke is a Professor of Applied Economics at Johns Hopkins University and one of the world’s foremost monetary experts.
Asked about whether he thinks that Euro’s share will continue to rise in the global transactions and central banks’ reserves in the near future, Hanke said, “The euro was also the most used currency in SWIFT for a time some years ago. I do not think the frequency of use in SWIFT is of any particular significance. The IMF’s quarterly Composition of Foreign Exchange Reserves (COFER) survey has had the euro at only around 20% of the total for a number of years; the dollar is a bit above 60%. That breakdown is probably a bit more relevant when viewing the significance of the euro and the dollar. Indeed, the dollar is the world’s dominant currency. If you add all of the dimensions of the world’s currencies and their worldwide use, the dollar would probably tip the scales at close to 80% of the total”.
Prediction about the dollar’s value when President Biden comes to the office
According to Professor Hanke, at present, even though the dollar has lost a bit of value against the euro since the first of the year, the dollar still remains strong relative to the euro. But, he thinks it is likely that the dollar might drift a bit lower against the euro, and that is the most important exchange rate to watch. Indeed, it’s the most important price in the world.
Role of Yuan in global transactions
Concerning China’s effort to globalize Yuan, there is a question about Yuan’s share from global transactions in the coming years. According to professor Hanke, the Chinese yuan is an inconvertible currency. Until the Chinese yuan is made convertible, it will remain largely irrelevant as an international currency.