Invoicing Currency and Financial Hedging

Victor Lyonnet, Julien Martin and Isabelle Mejean

Journal of Money, Credit and Banking, 2022, vol. 54, issue 8, 2411-2444

Abstract: We examine the link between exporters' currency choices and their use of financial hedging instruments. Large firms are more likely to use hedging instruments, especially those pricing in a foreign currency. We provide suggestive evidence that access to hedging instruments increases the probability of pricing in a foreign currency. A model of invoicing currency choice augmented with hedging can rationalize these facts. In the model, large firms that would have chosen to price in their own currency in the absence of hedging instruments can decide to set prices in a foreign currency if they have access to such instruments.

Date: 2022
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Citations: View citations in EconPapers (3)

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https://doi.org/10.1111/jmcb.12966

Related works:
Working Paper: Invoicing Currency and Financial Hedging (2022)
Working Paper: Invoicing Currency and Financial Hedging (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:54:y:2022:i:8:p:2411-2444

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