Amid the turbulence shaking the global economy, an unusual scene is unfolding: the weakening of the US dollar–long considered a safe haven in times of crisis.
This has opened the door for the euro to emerge as a stronger player on the international financial stage.
The pressing question now is: Is this a fleeting opportunity or the beginning of a deep transformation in the global monetary system?
For the first time in years, European officials see a strategic glimmer of hope amid growing global concerns over US assets.
The sweeping changes introduced by US President Donald Trump to global trade rules and his repeated attacks on independent US institutions, such as the Federal Reserve, have eroded traditional trust in the dollar as a safe asset.
Although markets have somewhat calmed following attempts by the Trump administration to reassure investors, the psychological damage has already been done.
During the IMF and World Bank spring meetings in Washington, many European officials expressed optimism about capitalising on this historic moment.
As Valdis Dombrovskis, the European commissioner for the economy, stated: “Our stability, predictability, and respect for the rule of law are already proving their strength. These factors collectively enhance the appeal of euro-denominated assets among investors seeking more stable alternatives”.
This shift is reflected in the figures. The euro has risen 5.4 per cent against the dollar since the beginning of April, reaching its highest level since late 2021.
Yet this surge raises questions: Is it merely temporary, or the start of a long-term trajectory to strengthen the euro’s global standing?
Currently, the euro accounts for around 20 per cent of global foreign exchange reserves, while the dollar still dominates with a share exceeding 50 per cent.
However, recent positive developments in the European bond market, improved yields, and growing confidence in the European Central Bank as a lender of last resort lay a solid foundation for the euro to compete seriously in the future.
Still, the euro’s path to becoming a true rival to the dollar is not without obstacles. As Klaas Knot, governor of the Dutch Central Bank noted: “The euro’s external strength depends on internal strength within Europe. This calls for deep reforms, including strengthening the single market, establishing a capital markets union to ensure the free movement of capital across European borders, and enhancing the EU’s overall economic competitiveness”.
Olli Rehn, governor of the Finnish Central Bank, also said: “Europe faces a real test: seize this opportunity to elevate the euro’s role as a credible global alternative or let it slip away”.
Ultimately, the dollar will not collapse overnight, but the world of currencies is quietly witnessing the early stages of shifts that could reshape the global financial system for decades to come. Europe must act wisely and swiftly since opportunities like this are rare.
Mohamed Fahmy is the editor-in-chief of The Egyptian Gazette and Egyptian Mail newspapers
