Export Dynamics and Invoicing Currency

Kazunobu Hayakawa, Nuttawut Laksanapanyakul, Toshiyuki Matsuura and Taiyo Yoshimi
Additional contact information
Nuttawut Laksanapanyakul: Thailand Development Research Institute
Toshiyuki Matsuura: Keio Economic Observatory, Keio University
Taiyo Yoshimi: Faculty of Economics, Chuo University

No 2024-005, Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University

Abstract: This study explores the evolution of invoicing currency choice, focusing on inertia in invoicing currency and the role of export experience. We theorize that inertia in the producer�fs currency pricing (PCP) weakens with lower forex risk management costs, whereas inertia in foreign currency pricing is more pronounced under similar conditions. For the export experience, exporters tend to adopt PCP when they start exporting if the costs are significant. Empirical analysis using firm-level export data in Thailand from 2007 to 2014 supports these predictions. Specifically, we show that the inertia in PCP diminishes with access to forward exchange contracts or when the importer�fs currency has a higher forex turnover than the Thai baht. We also show that the tendency to adopt PCP in first exports diminishes under these conditions. Our findings imply that exporters initially prefer invoicing in their own currency, but this preference decreases as export experience accumulates or if there are financial tools or favorable currency turnover conditions.

Keywords: Invoicing currency; Export dynamics; Inertia; Learning effect; Customs data (search for similar items in EconPapers)
JEL-codes: F14 F31 F39 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2024-03-03
New Economics Papers: this item is included in nep-ifn, nep-int, nep-opm and nep-sea
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