A Test of Dominant Currency Hypothesis: Evidence From a Non-USD-non-Euro Country

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

No 33454, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the determinants and the dynamics of the exchange rate pass-through of the Japanese exporters, utilizing the official Customs declaration data. We first estimated the invoicing currency exchange rate pass-through and found that export prices invoiced in producer currency are the most rigid. Among local currency or vehicle currency use, US dollar invoicing is relatively more rigid than non-US dollar invoicing. The destination exchange rate pass-through estimates for local currency invoicing are between 35 and 40 percent, whereas those for Japanese yen or US dollar invoicing are close to complete. In addition, we find these discrepancies are even more accentuated in the longer run by analyzing the dynamics of the exchange rate pass-through.

JEL-codes: F3 F31 F32 F34 (search for similar items in EconPapers)
Date: 2025-02
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