In 2023, a significant trend emerged in the European Union’s trade landscape: the euro solidified its position as the dominant currency for exports. Remarkably, 52% of all EU exports were invoiced in euros, surpassing the US dollar which accounted for 32%. This pivotal statistic highlights the euro’s strength in international trade, particularly when considering exports from the EU. While the US dollar remains a crucial player, especially for EU imports, understanding this 52% figure is key to grasping the current dynamics of EU trade and its implications for the EUR/USD exchange rate.
Figure 1 provides a clear visual representation of this currency distribution in extra-EU trade for 2023.
Euro vs. US Dollar: A Tale of Two Currencies in EU Trade
The overall picture of extra-EU trade reveals a nuanced story. While the euro leads with 46% of total trade (imports plus exports), the US dollar is a close second at 42%. However, dissecting these figures into imports and exports uncovers a more distinct pattern. The euro’s strength is particularly pronounced in exports, reaching that noteworthy 52% figure. In contrast, the US dollar dominates EU imports, accounting for 50% of invoices, while the euro represents 41%. This divergence underscores the specialized roles these currencies play in the EU’s international commerce. Member States’ currencies outside the euro and other global currencies make up smaller portions of the invoicing landscape.
Figure 1 illustrates the overall invoicing currency shares in extra-EU trade for 2023, providing a comprehensive view of the euro and US dollar’s positions alongside other currencies.
The Euro’s Export Prowess: Decoding the 52%
The 52% share of euro-invoiced exports is a compelling indicator of the euro’s international standing. This majority share suggests a preference for the euro in transactions involving goods leaving the European Union. Several factors could contribute to this export dominance. European exporters might favor invoicing in their home currency to mitigate exchange rate risks. Furthermore, trading partners in certain regions might find the euro more convenient or stable for transactions with EU businesses. This 52% statistic is not just a number; it reflects strategic choices and economic realities shaping EU trade.
Figure 3 breaks down the invoicing currencies specifically for extra-EU exports in 2023, highlighting the euro’s commanding 52% share compared to the US dollar and other currencies.
US Dollar’s Import Clout: A Counterbalance to Euro Exports
While the euro shines in exports, the US dollar maintains a strong foothold in EU imports, capturing 50% of the invoicing. This import dominance suggests different dynamics at play. Many commodities, particularly oil and raw materials, are often priced and traded globally in US dollars. This established practice could explain the higher dollar usage for EU imports. Additionally, businesses importing into the EU from the United States or dollar-pegged economies might naturally transact in US dollars.
Figure 2 details the currency breakdown for extra-EU imports in 2023, showing the US dollar’s leading 50% share and the euro’s significant but second-place position.
Regional Variations: Euro and Dollar Preferences Across EU Members
The choice of invoicing currency isn’t uniform across the EU. Analyzing individual Member States reveals diverse preferences. For extra-EU imports, the US dollar was the most used currency in 16 out of 27 Member States in 2023. Finland, for example, showed a high dollar usage for imports at 67%. Conversely, the euro took the lead in ten Member States, with Slovenia displaying the highest euro usage for imports at 77%. For exports, the euro was even more dominant, leading in 19 Member States. Slovenia again topped the list with a remarkable 90% of exports invoiced in euros, while Ireland showed the lowest euro usage for exports. These regional variations highlight the complex interplay of national economies and trade relationships within the EU.
Figures 4 and 5 illustrate these Member State variations, showing the percentage of extra-EU imports and exports invoiced in euros, US dollars, and other currencies for each country.
Product Categories: Currency Preferences by Sector
Analyzing invoicing currency by product category reveals further insights. Petroleum products stand out, with the US dollar being the overwhelmingly dominant currency for both imports (82%) and exports (68%). This reinforces the global pricing of oil in US dollars. However, for primary goods (excluding petroleum), the euro takes the lead in both imports (52%) and exports (60%). In manufactured goods, the euro also edges out the US dollar for both imports and exports, although the margins are narrower. These product-specific preferences reflect established trade practices and commodity market dynamics.
Figures 6 and 7 detail the invoicing currency breakdown by product category for extra-EU imports and exports respectively, showcasing the US dollar’s dominance in petroleum and the euro’s strength in primary and manufactured goods.
Conclusion: Euro’s Export Strength and the EUR/USD Relationship
In conclusion, the 2023 data on invoicing currency for EU trade reveals a clear picture: the euro is the leading currency for EU exports, evidenced by the significant 52% share. While the US dollar remains paramount for imports, the euro’s export dominance underscores its importance in global commerce. This dynamic interplay between the euro and the US dollar in EU trade is a crucial factor influencing the EUR/USD exchange rate and reflects the broader economic strengths and trade relationships of the European Union. Understanding these currency trends is vital for businesses, policymakers, and anyone interested in the intricacies of international trade and currency markets.
Source: Eurostat (ext_lt_invcur)
