The US dollar has asserted its strength this year. However despite the broad-based rally, analysts speculate that its reign will come to an end soon. The main reason why more and more countries reduce volumes of dollar-denominated settlements is the US trade policy. In other words, trade protectionism of Donald Trump makes the US currency overvalued and forces other countries to seek alternatives to the greenback. It is the single European currency which benefits the most from the situation.
Since the time of its introduction, the euro has won enormous popularity in the global trade. A lot of countries prefer to issue invoices in euros. No wonder the EU is sure to grasp this opportunity. The inflated US dollar is losing competitive advantage among exporters. In this context, the euro is a welcome alternative for international trade settlements. In the long term, the euro has a fair chance of downplaying the US dollar in the global trade and even taking on the leadership. The euro is greenlighted for different reasons. Some countries like Iran, Pakistan, and Russia have taken a forced decision to squeeze the US dollar out of a domestic economy as they have to survive lingering US sanctions. The EU promotes its currency as a sophisticated campaign. Indeed, a lot of countries have been hurt by the US trade protectionism. “Many countries have to deal with sanctions and trade wars, triggered by Donald Trump. Therefore, the EU nudges other countries to adopt the shared currency for international transactions. This campaign comes as no surprise,” Konstantin Voronov from Russia’s Institute of World Economy and International Relations made comments.
