Exchange rates, invoicing currencies and the margins of exports

Kwan Yong Lee and Kanda Naknoi

Journal of International Money and Finance, 2024, vol. 141, issue C

Abstract: We examine effects of currency depreciation on South Korean exporting firms, taking into account invoicing currencies in international trade. Such effects on real exports (intensive margin) and the probability of exporting (extensive margin) are decomposed into invoice-currency adjusted improved price competitiveness, increased costs of imported inputs, and increased burden of foreign-currency debts. We find strong evidence that currency depreciation affects both margins through price competitiveness, and invoice currencies play an important role in explaining such effects. However, evidence for impacts of currency depreciation via the costs of imported inputs and the burden of foreign-currency debt channel is weak.

Keywords: Exchange rates; Foreign currency debts; Intermediate inputs; Invoice currencies, Margins of exports (search for similar items in EconPapers)
JEL-codes: F14 F31 F41 G01 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:141:y:2024:i:c:s0261560624000032

DOI: 10.1016/j.jimonfin.2024.103016

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