The Myth of U.S. Dollar Dominance in Japanese Exports: New Evidence from Japanese Customs Level Data

Uraku Yoshimoto, Kiyotaka Sato, Takatoshi Ito, Junko Shimizu, Yushi Yoshida and Taiyo Yoshimi

No 33748, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: While Japanese exports are generally considered invoiced mainly in U.S. dollars (USD), this study presents contrary evidence that most Japanese firms choose yen-invoiced exports. Surprisingly, only the top one percent of firms in size tend to choose USD-invoiced exports, based on the Japan Customs export declaration data that was newly made available to researchers. By conducting fixed-effect panel estimation using the granular Japan Customs transaction data, combined with the most comprehensive firm-level data compiled by the Ministry of Economy, Trade and Industry (METI), we demonstrate that the firm size and the intra-firm export share significantly reduce yen-invoiced exports. Smaller firms with few overseas subsidiaries tend to choose yen-invoiced exports to avoid foreign exchange risk. In contrast, larger firms efficiently manage foreign exchange risk arising from USD-invoiced exports, since they tend to export to overseas subsidiaries and benefit from operational hedging that offsets USD-denominated import payments with export revenues within group companies. Smaller firms would continue to choose yen-invoice exports unless they can benefit from operational hedging.

JEL-codes: F30 F31 F37 F41 (search for similar items in EconPapers)
Date: 2025-05
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